Posted in Operations and Supply Chain Terms, Total Reads: 652
Definition: Materials Planning
Material Planning is the scientific method of planning and determining the requirements of consumables, raw materials, spare parts and other miscellaneous materials essential for the production plan implementation. This plan forms a sub- component of the overall organizational plan, hence it is always derived from the overall organizational plan. It essentially carries out the process of forecasting and planning of procurement of materials.
There are two major factors influencing the material planning, they are:
• Macro factors: These include factors such as business cycles, import and export p [policies, price trends, credit policy and other global factors.
• Micro factors: These factors include the internal organization factors such as production plan, investments, corporate policies, inventory holding. Other essential factors such as the time of procurement, working capital, acceptable inventory levels, delegation of power seasonality also influence the material planning.
Material Planning can be carried out by:
• Requirement based on past consumption
• Material Resource Planning (MRP): MRP starts with the production plan of the concerned manufacturing. Once the annual production plan is determined, the material requirement is calculated by detailed analysis of materials not in use, the ones not in use and requiring procurement, lead time of procurement etc.