home Converter Planning the activities of the production unit of the Amur Cable Plant OJSC. Production plan

Planning the activities of the production unit of the Amur Cable Plant OJSC. Production plan

A production plan is the established rules for the production of products or the provision of services. They are necessary to ensure the stable operation of the company.

What is included in the concept of a production plan?

The production plan (PP) refers to the administrative activities of the company. It includes various management decisions regarding the number of employees and the volume of raw materials used. The PP includes the following components:

Work that will be subcontracted.
Optimal volume of purchased raw materials.
Control over the quality of goods and services.
Unit cost of production.
Usage .
Analysis of existing premises, owned or leased, determining the need for new space.
Analysis of staff: number, qualifications, salary.
Marginal profit.

The exact structure of the production plan is determined based on the characteristics of a particular company.

Why do you need a production plan?

The main function of the PP is to achieve the goals set by the enterprise. Let's consider all the tasks that the production plan allows you to solve:

Attracting new clients, increasing the loyalty of representatives of the existing client base.
Full use of all available resources to meet consumer needs and reduce costs.
Production of competitive goods, introduction of technological innovations.
Improving the quality of products and services.
Purchasing the optimal volume of good quality raw materials at low prices.
Creating a reserve of resources in case of increased demand.
Operating within the established budget.
Reducing company loans.
Standardization of reporting.
Details of existing costs.
Creating a strategy that will be relevant even in unplanned situations.

Large companies must have a production plan.

Principles used in planning

When drawing up the PP, it is necessary to be guided by the following principles:

Continuity of planning: the plan is relevant throughout the entire production period.
A plan is required when executing any form of company activity.
Principle of unity: software must be systematic, taking into account the relationships between labor processes.
The principle of economy: the software should be such as to obtain maximum results at minimum costs.
PP must be flexible. That is, it can be changed if circumstances require it.
The accuracy of the plan must be sufficient to achieve the set goals.
As part of the partnership, all branches of the company are interconnected.

When drawing up a plan, you must also remember the principle of results orientation.

How is a general document for PP drawn up?

As a rule, a production plan is drawn up for a year. It contains general manufacturing specifications. The basis for drawing up is forecasts regarding future demand for products, as well as a production load plan. When drawing up the document, production standards, reserves, and number of employees are calculated. When drawing up a PP, it is necessary to formulate a general concept of the company’s activities. For example, the document takes into account everything, and not individual product categories. There is no need to dwell on details.

A general production plan is required by large enterprises that manufacture a large range of products. For a small company, it will be enough to draw up a work plan in the form of a work schedule.

IMPORTANT! The PP must reflect key aspects of the enterprise’s activities: the total number of employees, established production standards.

Composition of the production plan

Consider the structure of the production plan:

Title page.
Content.
Basic information about the company.
Basic information about manufactured products or services.
Organizational plan.
Marketing plan.
Production plan.
Investment plan.
Financial plan.
Applications.

The appendix specifies additional information that may be required as part of the PP.

How is capacity utilization determined for a production plan?

LET'S CONSIDER AN EXAMPLE: The organization plans to start manufacturing garden carts. Marketing research is conducted to determine consumer preferences. His results: garden carts in the mid-price category are most in demand among buyers. Marketing research data helps determine which products make sense to produce. After this, the volume of products to be produced is calculated. In this case, you need to focus on the expected demand for carts. If demand is less than the volume of products produced, some of the products will simply remain unclaimed.

If an organization has been operating for a long time, it makes sense to compare the commercial forecast of demand with the available capacity. This is necessary in order to determine the need for additional capacity. If such a need is identified, the PP must indicate a list of required equipment. The following information is also indicated:

Costs of paying salaries to employees.
Availability of employees with appropriate qualifications.
Electricity costs.

The significance of each of these indicators depends on the characteristics of the company's activities.

How to reflect the production process in the PP?

When manufacturing a product, you need to determine the method of its production. When forming a software project, it is necessary to analyze the available equipment and technologies and select the most effective option. In this case, a choice is made between two forms of production:

Low or high degree of automation.
Standard or customized technology.
Flexibility or system performance.

For most companies, the conveyor production method is suitable. If the organization plans to work on special orders, other production methods will be needed. All these aspects must be reflected in the production plan.

Common mistakes when drawing up a production plan

Global errors in drawing up a production plan lead to the fact that the document becomes completely irrelevant. Consider these errors:

Unjustified increase in stocks in the warehouse. The purchase of raw materials in excess quantities leads to the fact that part of the reserves simply remains unclaimed. This leads to a suspension of financial processes and an increase in the costs of maintaining warehouse premises.
Misuse of reserves. Involves the direction of raw materials for third-party purposes. This results in all the goods being sold out, but new raw materials have not yet arrived from the supplier.
Increase in work in progress. When urgent orders arise, a decision is often made to suspend production. This entails the suspension of work processes. The problem can be solved by refusing some urgent orders.

IMPORTANT! It is recommended to start drawing up the PP 1-2 months before the start of the financial year. If the financial year coincides with the calendar year, the formation of the PP should begin in early October. More than one specialist should work on drawing up a production plan. The heads of all departments of the company are involved in this work.

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Megaresearch analysts have developed a business plan for organizing the production of cable products.

Within the framework of this business plan, an investment project is considered to organize the production of cable products in the Sverdlovsk region. As part of the project, it is planned to produce low and medium voltage power cables (KVG/VVG).

The goal of the project is to identify prospects and evaluate the effectiveness of investment in the project.

The way to achieve the project goal is:
. organization of an enterprise for the production of cable products;
. sales of finished products on the regional market.

Production is planned to be organized on rented premises. For these purposes, a room has already been selected in accordance with the requirements for the production process. Detailed information on production space and equipment is presented in the “Production Plan” section.

The volume of investment in the implementation of the project will be about 29 million rubles. The payback period for the project under consideration is more than 1.5 years, taking into account discounting.

As part of the marketing plan of the business plan, an overview of the cable products market in the Sverdlovsk region is presented. The main trends in the market are considered, a consumer analysis is provided, a review of potential competitors is given, and a forecast for the development of the cable products market is given.

The production part of the business plan contains a description of buildings and premises, calculation of construction costs, description of the technological process and necessary equipment (

The financial model of the project considers an analysis of the project's sensitivity to changes in the external environment.

Megaresearch analysts came to the conclusion that the implementation of this project in the current conditions seems promising if issues of protecting the company from existing market threats and weaknesses are worked out. Detailed information can be found in the full version of the project.

The business plan reveals the essence of the project as fully as possible, collects current data on the market, the cost of resources, and makes all the necessary and sufficient calculations of the required indicators.

This project is individually finalized in accordance with the client’s wishes.

You can order a similar business plan, taking into account the individual characteristics of the business and region.

1. Project Summary 6
2. Essence of the proposed project 8
2.1. Description of the project and proposed cable products 8
2.2. Features of project organization 9
2.3. Information about project participants 12
2.4. Project location 12
3. Marketing plan 13
3.1. Cable market overview 13
3.2. Main trends in the market 15
3.3. Consumer analysis. Consumer segmentation 20
3.4. Review of potential competitors 21
3.5. Market development forecast 22
3.6. Pricing in the market 23
4. Production plan 23
4.1. Description of buildings and premises 23
4.2. Construction cost calculation 24
4.3. Description of equipment 24
4.4. Description of the technological process 27
4.5. Other technological issues 29
4.6. Raw materials, materials and components 29
5. Organizational plan 31
5.1. Personnel plan 31
5.2. Sources, forms and conditions of financing 31
5.3. Project schedule 32
6. Financial plan 33
6.1. Initial data and assumptions 33
6.2. Prices and nomenclature 34
6.3. Investment costs 35
6.4. Requirement for initial working capital 35
6.5. Tax deductions 36
6.6. Operating costs (fixed and variable) 36
6.7. Cost calculation 37
6.8. Sales plan 37
6.9. Revenue calculation 37
6.10. Profit and loss forecast 38
6.11. Cash flow forecast 39
6.12. Project effectiveness analysis 40
6.13. Project Risk Analysis 41

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Structure of the production section of the business plan

Essentially, the purpose of this chapter is to familiarize the investor with the production process, the list of necessary equipment and the number of personnel. In other words, the production plan must show that you are able to organize the production of the required volume of high-quality goods, as well as establish the sales process and prepare the necessary space within the planned time frame.

If we are talking about an enterprise that is focused on the production of a certain product, the first thing you need to clarify is whether you are the owner of an existing production facility, or are just planning to open it.

Often the key guideline for writing this section is the product sales plan. Therefore, you need to describe in detail exactly how you plan to produce products and consider in detail all the stages of creating your product or service. Each position described should include an approximate time frame, as well as the costs that will be required to organize it.

1. Description of the production process

If you are planning to open a production facility, you definitely need to describe all the stages and features of the technological process, starting with the purchase of consumables and necessary raw materials, and ending with the sale of finished goods (even if you are planning to open a store, then a shortened version of the process from the delivery of goods to their placement in store and sale is simply necessary).

Think about how exactly you can modify this process. Describe your considerations and all the necessary activities and expenses for this. Particular attention should be paid to the structure and composition of production facilities. If you are planning to open a factory or, for example, a plant, this information should be presented in a special annex attached to the plan.

2. Description of raw materials and their suppliers

Supply issues should be a separate item. Describe what raw materials and supplies are required for production, and how exactly you plan to transport and store them. Moreover, you should also indicate how exactly you are going to carry out quality control and monitor timely deliveries, and whether there are alternative suppliers of raw materials in case of problems with existing ones.

3. Production premises and land plots

Next, you need to describe whether you own land, suitable buildings, raw materials or equipment. Where will the production be located, where is the warehouse for raw materials, where is the warehouse for finished products. If not, describe what kind of premises, equipment, etc. you plan to purchase or rent, what time frames will be required for paperwork and installation of equipment, and how much it will cost the company (information about the purchase of premises, equipment, and land plots will need to be indicated in the investment section of the business plan).

4. Energy supply

Again, if your project involves the opening of a serious production facility, you also need to describe the main issues of energy supply, namely the capacity of energy sources, their cost, availability on the market, and the possibility of temporarily replacing existing sources in the event of accidents and malfunctions.

5. Production costing and cost

In this section it will be necessary to show what costs of raw materials, materials or energy resources will be spent on the production of one unit of the project’s product. After which its cost must be calculated and the marginal profit of the product planned for production must be shown.

6. Fixed production costs

Remember, if you are planning to open a store, salon or other enterprise that does not involve the production of products, but only the sale of certain goods or services, this section of the production plan will be less detailed and highly specialized, but this does not mean that it can be completely ignored. In this case, you need to describe the area of your establishment, retail outlet, etc., dividing them into special zones, indicate all the amounts required for equipping the premises, purchasing raw materials and starting the sales process, as well as maintaining and developing the enterprise.

Example of a production plan for a business plan for opening a clothing store

The clothing store is located in the Sovetsky district of Yekaterinburg with a population of 250 thousand people. (the most crowded area of the city). In close proximity to the store there is a residential complex on a high-traffic street. Also nearby the retail outlet are bus stops (70 meters), office buildings and banks (190 and 230 meters), shopping centers, restaurants, cafes and grocery stores (from 80 meters).

The store is located on a rented area of 185 sq. m. The premises are divided into the following areas: entrance area (30 sq. m), sales area (100 sq. m), fitting room area (30 sq. m), cash desks (15 sq. m), bathroom (12 sq. m) . The rental cost is 100 thousand rubles per month. The lease agreement is valid for 5 years.

The costs of opening a clothing store, including the costs of developing a design project, repairs and remodeling (400 thousand rubles), purchasing equipment (400 thousand rubles), advertising campaigns and opening events (100 thousand rubles) and other expenses will amount to 1,500,000 rubles.

Fixed operating costs include the cost of purchasing batches of seasonal clothing. Also, fixed expenses include rent (100 thousand rubles), advertising costs (about 40 thousand rubles), utility bills, garbage removal, electricity payments (about 15 thousand rubles). Demand will be influenced by increased recognition of the store among the population. During the year, it is planned to increase store traffic to 80-85%.

Making a profit, successful development, minimizing risks are the main goals of any company. These goals can be achieved through planning, which allows you to:

foresee development prospects in the future;
more rational use of all company resources;
avoid bankruptcy;
improve control in the company;
increase the ability to provide the company with the necessary information.

It is advisable to divide the planning process into three stages:

1. Establishing quantitative indicators for the goals that the company must achieve.

2. Determining the main actions that need to be carried out to achieve goals, taking into account the impact of external and internal factors.

3. Development of a flexible planning system that ensures the achievement of set goals.

PRINCIPLES AND TYPES OF PLANNING

Any plan, including production, must be built on certain principles. Principles are understood as the basic theoretical principles that guide the enterprise and its employees in the planning process.

Continuity principle implies that the planning process is carried out continuously throughout the entire period of activity of the enterprise.
The principle of necessity means the mandatory application of plans when performing any type of work activity.
Unity principle states that enterprise planning must be systematic. The concept of a system implies the relationship between its elements, the presence of a single direction for the development of these elements, focused on common goals. In this case, it is assumed that the single consolidated plan of the enterprise is consistent with the individual plans of its services and divisions.
Principle of economy. Plans must provide for a way to achieve the goal that is associated with the maximum effect obtained. The costs of drawing up the plan should not exceed the expected income (the implemented plan must pay for itself).
The principle of flexibility provides the planning system with the opportunity to change its focus due to changes of an internal or external nature (fluctuations in demand, changes in prices, tariffs).
Precision principle. The plan must be drawn up with a degree of accuracy that is acceptable to solve the problems that arise.
Participation principle. Each department of the enterprise becomes a participant in the planning process, regardless of the function performed.
The principle of focusing on the final result. All parts of the enterprise have a single final goal, the implementation of which is a priority.

Depending on the content of the set goals and objectives, planning can be divided into the following types (Table 1).

Table 1. Types of planning
Classification sign	Types of planning	Characteristic
According to mandatory planning	Directive	Represents the process of making decisions that are binding on planning objects
According to mandatory planning	Indicative	Is of an executive nature and is not mandatory
	Strategic	Determines the main directions of enterprise development for the long term (from two years or more)
	Tactical	Determines activities aimed at expanding production, improving product quality, developing new areas of development or releasing new products
	Operational calendar	Determines the sequence of actions when making management decisions in short periods of time
According to the duration of the planning period	Long-term	Covers a period of more than five years
	Medium term	From two to five years
	Short term	Year, quarter, month
According to the degree of coverage of objects	General plan of the enterprise	Developed across the enterprise as a whole
	Site plans (individual divisions)	Developed for each structural unit
	Process plans	It is developed for each process of economic activity: production, sales, procurement, etc.

PRODUCTION PLANNING

Production plans are an important component of the entire planning system at an enterprise, so let’s talk in more detail about the development of production plans. Let's consider a production planning system consisting of four main links:

strategic production plan;
tactical production plan;
manufacturing program;
production schedule.

The primary goal of production planning is determine production standards to satisfy the needs of buyers, customers or consumers of the company's products.

When creating a production plan, there are four key issues to consider:

1. What, how much and when should be produced?

2. What is needed for this?

3. What production capacities and resources does the company have?

4. What additional costs will be required to organize the production and sale of products in the quantities necessary to meet demand?

These are priority and performance issues.

A priority- this is what is needed, how much and at what point in time. Priorities are set by the market. Productivity is the ability of production to produce goods, perform work, and provide services. Productivity depends on the organization's resources (equipment, labor and financial resources), as well as on the ability to receive paid materials, work, and services from suppliers in a timely manner.

In the short term, productivity (production capacity) is the amount of work performed over a certain period of time using labor and equipment.

The production plan reflects:

assortment and volume of products in physical and value terms;
the desired level of inventories to reduce the risk of production stoppages due to a lack of raw materials;
calendar plan for the production of finished products;
manufacturing program;
need for raw materials and supplies;
cost of manufactured products;
unit cost of production;
marginal profit.

STRATEGY AND TACTICS IN PRODUCTION PLANNING

Strategic production plan is associated with the overall development strategy of the enterprise, sales and purchasing plans, volume of output, planned inventories, labor resources, etc. It is based on long-term forecasts.

Tactical plan aimed at achieving the goals of the strategic plan.

Tactical plans contain detailed data on the production divisions of the enterprise (availability of labor and material resources, equipment, transport, storage areas for inventories, finished products, etc.), the measures necessary for the implementation of the production program and the timing of their implementation.

Tactical action plans are supplemented by cost plans, which contain data on costs (cost) within departments, as well as plans for resource requirements.

Level of detail of manufactured products in production terms is usually low. Detailing is carried out by enlarged groups of goods (for example, refrigeration equipment, ovens, etc.).

PRODUCTION SCHEDULE

The production schedule is developed for production units. It represents a schedule for the release of certain types of products on time. The following is used as initial information:

production plan;
sales orders;
information about finished products in the warehouse.

In the calendar plan, the production plan is broken down by date and the number of final products of each type that needs to be produced in a certain period of time is determined. For example, the plan may indicate that each week it is necessary to produce 200 units of model “A” products, 100 units of model “B” products.

Scheduling allows you to:

establish the sequence of orders and the priority of work;
distribute material resources among production units;
produce finished products in strict accordance with the sales plan, minimizing equipment downtime, excess inventories and idle personnel.

Level of detail here is higher than in production terms. The production plan is drawn up in larger groups, and the production schedule is developed for individual final products and types of work.

MANUFACTURING PROGRAM

The production program is part of the production plan and contains data on the planned volume of production and sales of products.

The production program may be accompanied by calculations:

production capacity of the enterprise;
production capacity utilization factor;
intensity of workload of production units.

Product output volume

The planned production volume is calculated based on the sales plan and procurement plan.

The basis of the sales plan is:

contracts concluded with consumers of the enterprise’s products (customers of works and services);
sales data for previous years;
data on market demand for products obtained from managers.

Basis of the procurement plan:

agreements with suppliers of material and technical resources;
calculation of the need for material assets;
data on material assets in warehouses.

IT IS IMPORTANT

The quantity and range of products must satisfy market demand without going beyond the material reserves available at the enterprise.

The volume of finished products is planned by groups. A product belongs to one or another group according to classification criteria that allow one to distinguish one product from another (model, accuracy class, style, article number, brand, grade, etc.).

When planning the volume of output, priorities are given to goods that are in high demand among buyers and consumers (data provided by the sales department).

Production capacity of the enterprise

The production program determines the production capacity and compiles the balance of the enterprise's production capacity.

Under production capacity understand the maximum possible annual output of products in the nomenclature and assortment established by the plan, with full use of production equipment and space.

General calculation formula production capacity (M pr) looks like that:

M pr = P about × F fact,

where P about is the productivity of equipment per unit of time, expressed in pieces of products;

F fact - the actual operating time of the equipment, hours.

Main items of the balance of production capacity:

capacity of the enterprise at the beginning of the planning period;
the amount of increase in production capacity due to various factors (purchase of new fixed assets, modernization, reconstruction, technical re-equipment, etc.);
the size of the reduction in production capacity as a result of disposal, transfer and sale of fixed production assets, changes in the nomenclature and range of products, changes in the operating mode of the enterprise;
the amount of output power, that is, the power at the end of the planned period;
average annual capacity of the enterprise;
utilization rate of average annual production capacity.

Input power determined at the beginning of the year based on available equipment.

output power at the end of the planning period is calculated taking into account the disposal of fixed assets and the introduction of new equipment (or modernization, reconstruction of existing equipment).

Average annual capacity enterprises (M av/g) is calculated by the formula:

M av/g = M ng + (M inv × n 1 / 12) - (M select × n 2 / 12),

where Mng is the input power;

Mvv - power introduced during the year;

M out - power retired during the year;

n 1 - the number of full months of operation of newly introduced capacities from the moment of commissioning to the end of the period;

n 2 - the number of complete months of absence of retiring capacity from the moment of disposal to the end of the period.

Average annual production capacity utilization rate in the reporting period ( K and) is calculated as the ratio of actual production output to the average annual capacity of the enterprise in this period:

K and = V fact / M av/g,

Where V fact - actual output volume, units.

FOR YOUR INFORMATION

If the actual output volume is greater than the average annual production capacity, this means that the enterprise’s production program is provided with production capacity.

Let us give an example of calculating the average annual production capacity of an enterprise and the coefficient of actual use of production capacity to draw up a production plan.

There are 10 machines installed in the leading production workshop of the plant. The maximum productivity of each machine is 15 products per hour. It is planned to produce 290,000 products per year.

The production process is continuous, the plant works in one shift. The number of working days per year is 255, the average duration of one shift is 7.9 hours.

To calculate the production capacity of a plant, you need to determine operating time fund of a piece of equipment in year. To do this we use the formula:

F r = RD g × T cm × K cm,

where F r is the operating time of a piece of equipment, h;

RD g - number of working days per year;

T cm - the average duration of one shift, taking into account the operating mode of the enterprise and the reduction of the working day on pre-holiday days, h;

K cm - number of shifts.

Regime fund of work time 1 machine in a year:

F r = 255 days. × 7.9 hours × 1 shift = 2014.5 h.

The production capacity of the enterprise is determined by the capacity of the leading workshop. Leading workshop power and will be:

2014.5 hours × 10 machines × 15 units/hour = 302,174 units.

Factor of actual production capacity utilization:

290,000 units / 302,174 units = 0,95 .

The coefficient shows that the machines operate at almost full production capacity. The enterprise has enough capacity to produce the planned volume of products.

Unit load intensity

When drawing up a production program, it is important to calculate labor intensity and compare it with available resources.

Data on the labor intensity of a product (the number of standard hours spent on producing a unit of product) is usually provided by the economic planning department. An enterprise can independently develop labor intensity standards for manufactured types of products, carrying out control measurements of the time required to complete certain production operations. The time required to produce a product is calculated on the basis of the design and technological documentation of the enterprise.

The labor intensity of a product represents the cost of working time to produce a unit of product in physical terms according to the range of products and services produced. Labor intensity of production per unit of production(T) is calculated using the formula:

T = PB / K p,

where РВ is the working time spent on the production of a given quantity of products, h;

K n - the amount of products produced over a certain period, in natural units.

The plant produces several types of products: products A, B and C. Two production workshops are involved in the production of products: workshop No. 1 and workshop No. 2.

To draw up a production program, the plant needs to determine the labor intensity for each type of product, the maximum load on production assets, as well as the products that this program will focus on producing.

Let's calculate the maximum possible working time for each workshop.

Represents the maximum amount of time that can be worked in accordance with labor laws. The size of this fund is equal to the calendar fund of working time, excluding the number of man-days of annual vacations and man-days of holidays and weekends.

Workshop No. 1

The workshop employs 10 people.

Based on this number of employees, the calendar fund of working hours will be:

10 people × 365 days = 3650 person-days

Number of non-working days per year: 280 - annual vacations, 180 - holidays.

Then the maximum possible working time fund for workshop No. 1:

3650 - 280 - 180 = 3190 person-days, or 25,520 people.-h.

Workshop No. 2

The workshop employs 8 people.

Calendar working hours:

8 people × 365 days = 2920 person-days

Number of non-working days per year: 224 - annual vacations, 144 - holidays.

The maximum possible working time for workshop No. 2:

2920 - 224 - 144 = 2552 person-days, or 20,416 person-hours.

Let's calculate the intensity of workload of workshops. To do this, we will calculate the labor intensity of producing the planned number of products and compare it with the maximum possible working time. The data is presented in table. 2.

Table 2. Calculation of workload of production workshops
Index		Product	Maximum possible working hours	Workshop utilization percentage
Index			Maximum possible working hours	Workshop utilization percentage
Quantity of manufactured products, pcs.
Time spent on producing a given quantity of product, h

	for one product
	for the entire issue
	for one product
	for the entire issue

Based on the data in table. 2 you can do the following conclusions:

Product B is the most labor-intensive;
workshop No. 1 is 96% loaded, workshop No. 2 is 87.8% loaded, that is, the resources of workshop No. 2 are not fully utilized.

Feasibility of product release assessed using the ratio of labor intensity and marginal profit. Products with the lowest marginal profit per standard hour are usually excluded from the production program.

The write-off of indirect costs and the formation of product costs occurs using the direct costing method, that is, only direct costs are taken into account in the product costs. Indirect expenses are written off monthly to financial results. Direct costs include material costs and wages for production workers. Therefore, we will draw up an estimate of direct (variable) costs for production. Let's define marginal profit for products A, B and C. The data are presented in table. 3.

Table 3. Calculation of marginal profit
Index	Product A	Product B	Product C
Production volume, pcs.
Selling price of one product, rub.
Labor intensity of one product, standard hours
Direct costs for one product (wages), rub.
Direct costs for one product (raw materials and materials), rub.
Cost of one product, rub.
Marginal profit of one product, rub.
Marginal profit per standard hour, rub./standard hour

Product B has the lowest profit margin, so the production plan will focus on products with higher profit margins (A and C).

RESOURCE REQUIREMENT PLAN AND BASIC STRATEGIES FOR PRODUCTION PLAN

Usually attached to the production program resource requirement plan— plan for the production and purchase of raw materials and supplies that are used in the manufacture of products or performance of work provided for in the production schedule.

The resource requirement plan shows when raw materials, materials and components will be needed to produce each final product.

Production planning has the following characteristics:

a planning horizon of 12 months is applied with periodic adjustments (for example, monthly or quarterly);
accounting is carried out in aggregate by groups, unimportant details (colors, styles, etc.) are not taken into account;
demand includes one or more types of goods or product groups;
during the period provided for by the planning horizon, workshops and equipment do not change;
used when developing a production plan basic basic strategies:

Pursuit strategy;

Uniform production.

FOR YOUR INFORMATION

Businesses that produce one type of product or a range of similar products can measure output as the number of units they produce.

Enterprises that produce several different types of products keep records of homogeneous groups of goods that have the same units of measurement. Such product groups are determined based on the similarity of manufacturing processes.

Pursuit strategy

The strategy of pursuit (satisfying demand) is understood as producing the amount of product needed at a given time (the volume of production changes in accordance with the level of demand).

In some cases, only this strategy can be used. For example, restaurants, cafes, and canteens prepare dishes as orders are received from visitors. Such catering establishments cannot accumulate products. They must be able to meet demand when it arises. The pursuit strategy is used by farms during harvest and enterprises whose demand for products is seasonal.

Companies must maximize their productivity when demand peaks. Possible actions to achieve this goal:

additionally hire employees under a contract;
introduce overtime work due to production needs;
increase the number of shifts;
if there is not enough capacity, transfer part of the orders to subcontractors or rent additional equipment.

NOTE

During a period of downturn in business activity, it is permissible to introduce a shortened working day (week), reduce the number of shifts, and offer employees vacation at their own expense.

The pursuit strategy is important advantage: the volume of inventories may be minimal. A product is produced when there is a demand for it and is not stockpiled. This means that it is possible to avoid the costs associated with storing inventories.

The production program for the pursuit strategy can be designed as follows:

1. Determine the projected volume of production for the period of peak demand (usually this is the season).

2. We calculate the volume of products that need to be produced during the peak period based on the forecast.

3. Determine the level of product inventories.

planned cost of finished products (full or incomplete);
planned cost per unit of production;
additional costs that are incurred to produce products during periods of demand;
marginal profit per unit of production.

Uniform production

With uniform production, a volume of output equal to average demand is constantly produced. Businesses calculate the total demand for a planned period (for example, a year) and, on average, produce sufficient volume to satisfy this demand. Sometimes the demand is less than the quantity produced. In this case, product inventories accumulate. At other times, demand exceeds production. Then the accumulated stocks of products are used.

Advantages uniform production strategies:

equipment is operated at a constant level, which avoids the cost of its conservation;
the enterprise uses production capacity at the same pace and produces approximately the same volume of products every month;
the enterprise does not need to maintain excess productivity resources to meet peak demand;
there is no need to hire and train new employees, and fire them during periods of recession. It is possible to form a permanent workforce.

Disadvantage of the strategy: During periods of decreased demand, inventories and finished products accumulate, the storage of which requires costs.

General procedure for developing a production program for uniform production:

1. The total forecast demand for the planning horizon period (usually a year) is determined.

2. The projected balances of finished products at the beginning of the planning period and the balances of products at the end of the period are determined.

3. The total volume of products that need to be produced is calculated. Calculation formula:

Total production volume = Total forecast + Finished goods balances at the beginning - Finished goods balances at the end.

4. The volume of products that needs to be produced in each period is calculated. To do this, the total volume of production is divided by the number of periods. If the plan is drawn up by month, then the planned annual production volume is divided into 12 months.

5. Finished products are distributed (based on supply contracts) and shipped according to the dates specified in the delivery schedules.

The production plan reflects the planned costs for the production of finished products and the standard cost of one product, determines the marginal profit for one product and its selling price.

Here are examples of the application of the strategies presented above.

The chemical plant has several lines for the production of de-icing reagents. These products are in demand during the winter. When developing a production plan for this type of product, the plant uses pursuit strategy.

Peak sales occur in December-February. The shelf life of the reagents is 3 years. The expected balances of reagents in the warehouse at the beginning of the planning year will be 1 t.

Production of the reagent is planned to begin in November and end in March. The balance of finished products at the end of March is minimal.

The formation of the production program by volume for November-March is reflected in table. 4.

Table 4. Production program by volume for November-March, tons
Index	November	December	January	February	March	Total
Demand in the previous period
Delivery plan
Production plan

In a production program, the supply plan is adopted at the demand level. The balances of finished goods at the beginning of each month are equal to the balances of finished goods at the end of the previous month.

Production plan for each month is calculated using the formula:

Production plan = Delivery plan - Balance of finished goods at the beginning of the month + Balance of finished goods at the end of the month.

The planned balances of finished products at the end of the month should not exceed 5 % from the planned volume of product supply to customers.

During the demand period falling on December-March, the plant plans to produce 194.6 t of reagent.

Having determined the required production output in the peak period in the program, the plant compiled a planned production cost estimate for 1 ton of reagent (Table 5).

Table 5. Planned production cost calculation for 1 ton of reagent
Index	Meaning
Production volume, t
Direct costs (salaries), rub.
Direct costs (raw materials and materials), rub.
Total direct costs, rub.
Overhead costs per month, rub.
Packaging costs, rub.
Total costs, rub.
Marginal profit, rub.
Sales price, rub.

Based on the production program and calculation of the cost of 1 ton of reagent, a production plan is drawn up. The data is reflected in table. 6.

Table 6. Production plan
Index	November	December	January	February	March	Total
Planned production volume in the current period, t
Total costs per 1 ton, rub.
Planned costs for the entire volume of production, rub.

The planned volume of production is 194.6 tons, the total amount of expenses is 1,977,136 rubles.

Sales plan - 195 tons, sales amount - 2,566,200 rubles. (RUB 13,160 × 195 t).

Profit company: RUB 2,566,200 - 1,977,136 rub. = RUB 589,064.

In addition to deicing products, the chemical plant specializes in the production of household chemicals. Production is uniform, products are released throughout the year. The enterprise forms a production program and production plan for the year.

Let's consider the annual production program and the annual production plan of a washing powder plant.

The annual production plan for finished products is adopted at the level of demand for the previous year. The demand for washing powder for the previous year, according to the sales department, was 82,650 kg. This volume evenly distributed by month. In each month it will be:

82,650 kg / 12 months = 6887 kg.

Supply plan is formed on the basis of existing orders and concluded supply contracts, taking into account changing market demand.

An example of the production program for the production of washing powder for the year is presented in table. 7.

Table 7. Production program for the production of washing powder per year, kg

Index

January

February

March

April

June

July

August

September

October

November

December

Production plan

Balances of finished goods at the beginning of the period

Balances of finished goods at the end of the period

Delivery plan

The expected balance of powder in the warehouse at the beginning of the planning year will be 200 kg.

Balances of finished products in warehouse at the end of each month are determined by the formula:

Balances of finished products in the warehouse at the end of the month = Planned volume of production + Balances at the beginning of the month - Volume of supplies.

Remains of finished products:

At the end of January:

6887 kg + 200 kg - 6500 kg = 587 kg;

At the end of February:

6887 kg + 587 kg - 7100 kg = 374 kg.

The calculations are carried out similarly for each month.

The production plan will reflect the following data:

Planned standard cost of 1 kg of powder - 80 rub.
The price of warehouse expenses is 5 rubles. for 1 kg.
Planned production costs:

. per month:

6887 kg × 80 rub. = 550,960 rub.;

. in year:

82,644 kg × 80 rub. = 6,611,520 rub.

Costs for storage of finished products - RUB 19,860.

When calculating warehouse costs, the balances of finished products at the end of each month are taken into account (Table 8).

Table 8. Calculation of warehouse costs

Index

January

February

March

April

June

July

August

September

October

November

December

Balances of finished products at the end of the period, kg

Warehouse cost price, rub./kg

Amount of warehouse expenses, rub.

There are no ready-made production plans. We need an integrated approach to developing an optimal production plan, taking into account economic activities and production technology.
The production plan should reflect changes in both external (fluctuations in market demand, inflation) and internal factors (increase or reduction in production capacity, labor resources, etc.).

It will not be possible to create efficient production without quality planning. Forming a plan is not an easy task, and its task is to comprehensively cover, as far as possible, the activities for organizing the production process, so that there are enough materials, equipment, and workers.

Understanding the production plan

Within a business, the production plan can safely be considered an administrative process. With its help, questions about the number of personnel and resources required to produce goods are resolved. It covers the following areas of activity:

Requirements for inventories, raw materials.
Suppliers.
Production process.
Power.
Quality control.
Premises.
Staff.

When planning work, each department should be focused on achieving the tasks assigned to it. To this end, the plan also reflects:

The procedure for including certain items in the plan is determined by the enterprise independently, and its structure depends on the categories of goods produced, the period for which the plan is drawn up, facilities and capacities. By the way, if necessary, a daily work plan for the enterprise or its divisions can be drawn up.

Classification and directions of production plans

They are usually classified by:

Coverage.
Time boundaries.
Character and direction.
Method of application.

The production plan should ultimately include three main documents:

General (main) - a plan for areas of activity, which describes the general concept and strategic goal, and not small details. There should also be product categories, but not specific types (example: the plan of a company producing façade paints indicates the total volume of production, without distribution by color and density).
The main work schedule - indicating the number of units for each of the manufactured types of products intended for release for a specific time.
A plan with the enterprise's needs for material resources.

If in the future the enterprise plans to expand production capacity, the necessary structures and buildings must be reflected in the production plan to ensure an uninterrupted work process, and with it the indicators:

Payroll Fund.
Demand for qualified specialists.
Electricity tariffs.
Location of suppliers and consumers.

It is necessary to develop a production plan as responsibly as possible, because miscalculations in it can not only make it irrelevant, but even cause damage to the production process.

The most common mistakes:

Excess inventory. As a rule, enterprises purchase raw materials and supplies in advance. We revised the plans - and some of the materials turned out to be unclaimed, finances were immobilized, and the costs of maintaining warehouse space were unreasonably growing.
Inappropriate use of reserves. For various reasons, raw materials and materials are sent from the warehouse to purposes not planned in advance, to the production of “left” goods. Due to late subsequent deliveries, fulfillment of earlier orders and commitments to customers are at risk.
Growing work in progress. It happens that the production of a certain type of product is suspended due to an unscheduled order. This problem can be avoided if some orders are refused, and the production plan is drawn up taking into account the criteria for the labor intensity of production of specific types of products and the maximum possible profit.

If you're having trouble creating a production plan, turn to the World Wide Web. Here you will always find more than one example of filling out this most important document for any enterprise.