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ERP (Enterprise Resource Planning), which translates to Enterprise Resource Planning in Turkish, enables manufacturing businesses to plan demand, inventory, purchasing, material requirements, capacity, and production orders through a common system. Production planning with ERP aims to systematically determine which product will be produced, when, in what quantity, and with what resources.
Knowing only customer orders is not enough for accurate production planning. Current inventory levels, open purchase orders, raw material requirements, production recipes, machine capacity, and delivery dates must all be considered together. ERP systems help manage production plans in a more controlled, measurable, and up-to-date manner by bringing this data together.
How to Create a Production Planning Process with ERP?
1. Demand and Order Data is Collected
The first step in production planning is determining how much product is needed. Demand can consist of customer orders, sales forecasts, inventory replenishment needs, or seasonal production plans.
An ERP system can evaluate sales and inventory data within the same framework. This allows planned production quantities to be determined not only by forecasting but also by current order and inventory levels.
2. Current Stock Status is Checked
Before planning new production, existing finished and semi-finished product inventories should be checked. If sufficient quantities of products are in stock, the need for new production may decrease.
An ERP system can display available inventory, reserved quantities, and open orders in warehouses simultaneously. If WMS integration is available, physical warehouse movements can also be reflected in production planning in a more up-to-date manner.
3. Product Recipes and Material Requirements are Calculated
The raw materials and semi-finished products required for the product to be manufactured are determined via the bill of materials or product tree. The ERP system can calculate how much of each material is needed based on the planned production quantity.
This calculation forms the basis of material requirements planning. After deducting materials currently in stock, the remaining quantities can be determined as either purchasing or internal production requirements.
4. Material Requirements Planning is done with MRP.
MRP (Material Requirements Planning) is a planning approach that determines when and how much of the necessary materials for production should be procured. The MRP structure within an ERP system evaluates production plan, inventory, and recipe data together.
The system can suggest purchasing proposals for missing raw materials or create new work orders for semi-finished products to be produced. This reduces the risk of production delays due to material shortages.
5. Production Schedule is Created
Once material requirements are determined, a plan is created for which product will be produced and on what dates. A production schedule can be created taking into account production start and end dates, delivery expectations, and priorities.
Urgent customer orders, critical products, or products with low stock levels can be prioritized. This allows the production sequence to be managed in a planned manner, rather than relying solely on manual decisions.
How are Production Orders, Capacity, and Actual Production Managed?
6. Machinery and Workforce Capacity are Evaluated.
For a production plan to be feasible, not only material availability but also production capacity must be considered. Machine operating times, shifts, personnel capacity, and production line suitability can all be included in the planning process.
ERP systems can reveal work centers that experience overload during certain periods or areas with underutilized capacity. This information helps in organizing the production plan in a more realistic way.
7. Production Orders are Created
Once the plan is finalized, production orders are created on a product basis. A production order may include information such as product, quantity, start date, end date, recipe, work center, and required materials.
Production orders clearly indicate which product, in what quantity, and on what date the operations teams need to produce. If ERP is integrated with EBR or MES systems, this information can be transferred directly to the production systems.
8. Raw Material Reservation and Production Launch are Managed.
Once a production order is created, the necessary raw materials can be reserved for that production. This prevents other orders or production orders from accidentally using the same stocks.
When production begins, the withdrawal of raw materials from stock is recorded. In systems with WMS integration, material picking and delivery to production can be managed through the warehouse system.
9. Planned and Actual Production are Compared.
Once production begins, information such as the actual quantity, materials consumed, production time, and waste generated can be recorded in the ERP system. This allows for comparison between planned and actual values.
Deviations from production targets, higher-than-expected raw material consumption, or delayed production orders can be reported. This data contributes to the creation of more accurate future production plans.
10. Production Results are Transferred to Inventory and Finance Processes
Once production is complete, the finished product can be added to inventory, and the raw materials used can be deducted from the stock. Thus, the physical production result is reflected in the inventory records on the ERP system.
Production costs can also be linked to financial processes. Raw materials, labor, and other production expenses can be analyzed on a product or production order basis.
What is Production Planning with ERP?
Production planning with ERP involves determining which product will be produced, when, and in what quantity by considering demand, inventory, recipes, raw materials, capacity, and delivery dates together. The planning process is then operationalized through production orders.
What is MRP?
MRP stands for Material Requirements Planning. It is used to calculate how much and when the necessary raw materials will be needed, based on planned production quantities and product specifications.
How does ERP use inventory information in production planning?
Current stocks of finished products, semi-finished products, and raw materials are used to determine production needs. Having sufficient products in stock can reduce production needs; a shortage of raw materials can lead to purchasing or production recommendations.
Can capacity planning be done with ERP?
Depending on the production module of the ERP system, machine, work center, shift, and workforce capacity can be included in the planning. This allows for the identification of capacity overruns or idle capacity on specific dates.
How to Track Production Orders with ERP?
Production orders can be tracked with different statuses such as planned, open, in production, completed, or closed. Start and end dates, production quantity, and actual consumption can be monitored through the system.
Can planned and actual production be compared with ERP systems?
Yes. Planned quantities, durations, and material consumption can be compared with actual production data. Deviations can be reported to evaluate production performance and planning accuracy.
How does ERP connect Production Planning with Purchasing?
MRP analysis can identify raw materials that are insufficient in stock and generate purchasing needs. This allows the production plan to provide the purchasing team with data on which materials need to be procured by what date.
Which systems can ERP integrate with?
ERP can integrate with systems such as WMS, EBR, LIMS, and QMS. WMS can share inventory and material movements, EBR can share production records, LIMS can share quality control results, and QMS can share production-related quality processes with the ERP.
What are the benefits of production planning with ERP for a business?
ERP-based production planning helps to identify raw material shortages earlier, reduce unnecessary inventory, utilize capacity more efficiently, track production orders more systematically, and create more realistic delivery plans.
Conclusion
Production planning with ERP is carried out by evaluating demand and order data, controlling inventory, calculating material requirements, planning capacity, and creating production orders. After production begins, the data is transferred to the system, allowing for a comparison of planned and actual values.
Especially in businesses where purchasing, warehousing, and production processes are interconnected, ERP transforms production planning from a standalone calendar process into an integrated resource planning process. Integration with systems such as WMS, EBR, LIMS, and QMS enables a stronger link between the production plan and real-world data in the field.
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