The Importance of Long-Term Planning in Manufacturing
Most organizations, no matter the industry, operate with some type of plan in place. In some cases, plans can cover short-term goals or objectives. However, it’s generally smart for any business to outline long-term goals so that efforts moving forward are effective at meeting those goals. In addition to simply establishing long-range plans, clearly communicating them to all stakeholders is critical. For plans to be successful, all parties must be on the same page, and that starts with clearly understanding what drives daily operations for the company.
Long-Term Planning in the Manufacturing Industry
Planning for the long-term is a critical step in ensuring manufacturers are successful and operations are sustainable. With these plans, organizations can effectively forecast demand and secure the resources needed/schedule production efforts to meet that demand. Rather than waiting for changes in demand or unexpected issues to arise and reacting, long-term planning allows manufacturers to plan and identify potential issues and plan and implement corrective actions before these significantly impact production.
So, how does a manufacturing leader establish and implement a long-term production plan? There are a few key steps involved.
Determine Core Objectives
Plans are nothing without clear objectives or goals in place to work towards. Defining these goals early on helps manufacturers then make key strategic decisions allowing the organization to work towards – and ultimately achieve them. While short-term goals are definitely needed, start by thinking long-term. Goals or objectives can stretch across all business functions. Most manufacturers work towards production or revenue goals. Others prioritize reduced energy consumption, customer satisfaction, and a variety of other measures of success.
The most important aspect of any objective is measurability. Clearly defining a goal is only one-half of the task. Then, you must define how this can be measured in a way that accurately reflects progress towards the goal.
Establish a Baseline
Knowing where you want to go is a critical first step, but just as important is knowing where you’re starting from. It’s important to have an accurate and updated understanding of how an organization is performing currently before implementing a plan for improving or growing. This means investing in the tools and software that accurately measure all production metrics, from units produced to machine downtime to quality benchmarks. Identify areas of strength as well as areas with opportunities for improvement. Often, this includes analyzing the competitive landscape to discover what works for others and seek out best practices to implement that will likely help the organization reach its goals.
Forecast Future Product Demand and Supply Chains
No matter what type of product a manufacturer produces, knowing current and projected future demand is extremely valuable. Knowing how much of a demand there will be for a product means the manufacturer can accurately plan for producing enough to meet those demands without producing in excess. Overproducing is just as – if not more – frustrating for a manufacturer. This is especially true with products that come with a shorter lifespan and carry the potential to either spoil or become defective over time if not sold. On the supply chain side of things, accurately forecasting trends allows organizations to be proactive when it comes to potential shifts in supply availability.
Above all, long-term planning allows manufacturers to have a clear picture of where they are at in terms of production and efficiency, where they want to be, and how the current market or external factors might play a role in determining whether or not their objectives are met. One of the main goals of this is to eliminate surprises and work in ways to remain flexible within the market.
Plan360: Minimize Surprise by Syncing Planning Efforts
For organizations looking to coordinate demand and capacity planning to maximize production and improve customer service, Plan360 is often a great option. Through its ability to collect and combine data points from sources throughout the production process, Plan360 can then create infinite planning horizons and scenarios. This allows for more accurate forecasting and gives managers the information needed to make data-driven decisions daily.
The software syncs all planning efforts, combining short-term goals with mid and long-term plans. Having accurately forecasted planning efforts in place means less of a chance of surprises throughout the manufacturing process. Among its many strengths, Plan360 is
Dynamic: Manufacturers must have a constantly accurate sense of where they are within core metrics as well as where demand sits. Plan 360 allows organizations to coordinate demand and capacity planning, leading to more efficient production and improved customer service.
Easily Integrated: Plan360 fully integrates with ERP software that might already be in place within a manufacturing facility. The integration allows for transparency and provides the tools that make the implementation and maintenance of a SIOP(Sales, Inventory, and Operations Planning) process streamlined and successful.
Accurate: When it comes to forecasting, accuracy is essential. Plan360 allows for manufacturers to combine several data points – often from multiple sources. Having access to these means they can create and analyze a near-infinite number of potential scenarios and plan for them accordingly
In recent implementations of Plan360, we’ve seen, on average:
- A 35% Reduction in Lead Time
- A 20% Reduction in New Product Introduction Time
- A 7% Increase in Revenue Per Employee
- A 5% Increase in Net Profit
Long-term planning can seem overwhelming, with the market constantly changing and so many factors to consider. However, establishing that plan and the goals that come along with it gives manufacturers a clear sense of where they hope to be in the future and allows them to make decisions along the way to best support those efforts. For a demo of the Plan360 software, or to simply discuss your manufacturing operations and identify areas for growth, we encourage you to reach out today!
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