Optimization Methods for Production Planning in Indonesian Manufacturing

By allocating forward from the initial process using raw materials, it naturally creates a plan to consume inventory first. However, by allocating backward from the later processes closer to shipment, it generates manufacturing orders for work-in-progress first, and the remaining inventory is allocated last, which may not prioritize inventory consumption.

Prioritizing Raw Material Inventory Consumption or Manufacturing to Meet Shipments

In Indonesian manufacturing, typically the planning personnel in the PPIC (Production Planning and Inventory Control) department create a production schedule (master production plan) based on internal notifications or order orders from the sales department, subtracting product inventory. Then, based on the BOM (Bill of Materials), they expand the components and adjust the manufacturing orders for work-in-progress considering safety stock days.

As a result, manufacturing orders pile up on the calendar, but by advancing orders on overloaded days or moving them to other machines, a production plan that can be digested by the production equipment in the factory is created. This method is called backward, but conversely, generating manufacturing orders for the required quantity of work-in-progress from the initial process to the later process and allocating them to machines is called forward.

In practice, after confirming the load with backward to ensure no delivery delays, it is often a hybrid of backward and forward to advance just enough to avoid excessive inventory and increase the operating rate. Regardless of the planning method, it is natural to want to prioritize manufacturing items with raw material inventory first from the perspective of FIFO (First In, First Out) of raw material inventory.

With forward, it naturally creates a plan to consume raw material inventory first, but with backward, since manufacturing orders for work-in-progress to meet shipments are generated first, raw material inventory is allocated last, which may not prioritize inventory consumption.

Planning to Produce from Orders with Raw Material Inventory First

To plan production from orders with raw material inventory first, in the production scheduler Asprova, during backward allocation, "among the replenishment orders for raw materials generated from order orders, those linked from purchase orders or outstanding orders other than inventory" are allocated first. This naturally results in orders linked to inventory being allocated last, creating a plan to produce from orders with raw material inventory first.

To allocate manufacturing orders linked to raw material orders other than inventory first with backward, set the following allocation rules (dispatching rules) in descending order.

When MRP (Material Requirements Planning) does not consider purchase orders or outstanding orders for raw materials, a production plan considering raw material constraints can be created by setting the earliest start date of the manufacturing order to the available date of the raw material (such as the arrival date). However, specifying the earliest start date functions with forward allocation, but when allocated backward from later processes with spare capacity in production equipment, it may not be effective.

Switching to Another Raw Material When Current Inventory is Depleted

In the initial process of board mounting, a raw material constraint can be set to switch to component B3 when the inventory of component B2 is depleted. To efficiently manage this process, set the instruction codes for components B2 and B3 to In2 in the manufacturing BOM and specify them as alternative raw materials.

Not Producing Manufacturing Orders Without Raw Material Inventory or Outstanding Orders

When setting up manufacturing orders, it is possible to create a production plan that does not produce those manufacturing orders if raw material inventory or outstanding orders (confirmed receipt quantity) are insufficient. This prevents unnecessary production and enables efficient production management.

Case: For example, if the inventory of component A is insufficient, setting automatic replenishment to "No" and the raw material constraint flag to "Yes" in the item table can prevent unnecessary production.

Takeaway: Efficient production management is possible by not setting up manufacturing orders when raw material inventory or outstanding orders are insufficient.

Frequently Asked Questions | Production Planning in Indonesian Manufacturing

We summarize frequently asked questions in line with the content of this article.

What is the difference between forward and backward?

Forward generates manufacturing orders sequentially from the initial process, planning to consume inventory first. Backward generates manufacturing orders from later processes closer to shipment, potentially delaying inventory consumption.

How to prioritize raw material inventory consumption?

By using the production scheduler Asprova and allocating orders for raw materials other than inventory first during backward allocation, it is possible to plan to prioritize raw material inventory consumption.

What is the production plan when raw materials are insufficient?

When raw material inventory or outstanding orders are insufficient, it is possible to plan not to produce those manufacturing orders. This prevents unnecessary production and enables efficient production management.