Production Planning and Control in a Steel Plant

Production Planning and Control in a Steel Plant

As per Ray Wild “Production planning is concerned with the determination, acquisition and arrangement of all facilities necessary for future operations”. Fixing goal of production and estimating resources required to achieve this goal is called production planning. It forecasts individual step into the production process. It helps to achieve production goals effectively, promptly and economically. According to James Lundy “the production control function involves the coordination and integration of the factors of production for optimum efficiency”. Production control is done after production planning. It implements the production plan. It directs, coordinates and controls the production. It helps to achieve the production goals. It helps to have maximum production at minimum cost. It also helps to have timely delivery of the products.

In a steel plant, production process is a production system whereby raw materials are converted into finished steel. In this production system, some byproducts are also generated. The production system has got a wide number and variety of processes differing in their nature, technology and work environment. The primary objective of the steel plant management is that the operation of these diverse production processes is carried out in efficient, economical and integrated manner to produce and dispatch steel products required by the customers. This can be achieved by proper planning and exercising necessary controls at required levels and places. Further, a very large amount of data is generated in the process system which need to be collected and analyzed so that the data can be presented in a manner that it become useful for proper monitoring of the processes as well as decision making. In short, very close production planning and control functions are to be carried out in steel plant for proper functioning of the production system. The production system is shown in Fig.1

PPC process

Fig 1 Production system

Production planning and control (PPC) results in effective utilization of plant capacity, equipment and resources which in turn results into control of the production cost. PPC ensures a regular and steady flow of production with all the processes and equipment put to their optimum use. This helps in achieving a continuous production of the products and dispatch of the products to the customers.

Objectives of PPC

PPC consists of planning of production to establish the route of production and to make schedules that ensures optimum utilization of materials, production facilities and workforce. PPC by close monitoring also ensures that the plant operation is carried out as per the plans and the results are obtained in terms of quantity, quality, delivery schedule and cost of production. The main objectives are:

  • To prepare and monitor the production schedules.
  • To carry out planning for the procurement of raw materials
  • To plan product dispatch alongwith the marketing or sales department
  • To facilitate in the attainment of maximum utilization of resources.
  • To plan production of products of needed quality.
  • To plan with minimum manufacturing cycle time.
  • To plan maintenance of optimum inventory levels at various production stages
  • To integrate maintenance schedules of the shop with production plan
  •  To plan production with maximum flexibility in operations.
  • To achieve coordination between process, workforce and other connected departments.
  • To collect various data and analyze it for monitoring and decision making.
  • To act as a custodian for the data of production system
  • To identify bottlenecks in fulfillment of production plans.
  • To facilitate cost and budget controls and to achieve the goals at minimum cost.

Stages of production planning

The production planning is carried out jointly with involvement of the concerned departments. The agreed inputs from the department are used for preparation of a centralized plan. This centralized plan is finally controlled by the management to ensure that it fulfills the objectives of the company. The production planning is done in usually in the following four stages.

  • The first stage is the long term plan which is generally done for 5 to 10 years. This planning is done in sufficient details and usually carried out for formulating long term policies of the company.
  • The second stage is annual plan. It is the most important stage for planning. The annual plan is a very detailed plan and contains besides production, planning for raw materials, consumables, fuel, product quality, and dispatch details. It also contains the planning of techno economic parameters. The annual plan is used by other departments for their planning. It is also used for the preparation of annual budget of the company as well as for resource allocation. This plan is also used for renewal of annual contracts or for planning new contracts in different departments. In fact, this annual plan is the basic plan for further planning activity in all other areas. A lot of input goes in preparation of this plan. The accuracy of this plan determines to a large extent the efficient working of the plant during the year. Annual plan should also have an inbuilt challenge in it. Normally this plan is broken into monthly plan and department plans.
  • The next and third stage of production planning is the monthly plan. The quantity of production is same as given for the month in the annual plan but it is detailed out with respect to the quality of products to be produced and dispatched. It also contains fairly accurate level of raw material requirement based on the inventory level. Sometimes the production quantity is adjusted from annual plan if any changes take place in the environment.
  • The fourth and final stage is daily plan. This plan is detailed with respect to grade wise production and dispatches. It includes scheduling of the production and dispatches.

In certain cases, sometimes it becomes necessary to carry out re-planning because of some happening in either external or internal environment for example change in market condition, an accident etc. Re-planning is not the corrective action since the targets undergo changes during re-planning.

 Control activities

 The control activities are important for ensuring that the production processes are taking place as per plans. Control activities help in taking corrective actions if some deviations are observed from the plans. While planning is a forward thinking activity, control involves looking backwards and to take actions so as to meet the requirements needed to meet the plan. The activities for controlling include the following:

  • Controls are related to plan implementation.
  • Control involves collection of data with respect to production, stocks, quality, techno-economic parameters, receipts of raw materials, and dispatches of the products etc. This also includes some other data which is not directly related to the production but important for the management for control purpose.
  • Control involves analysis of the collected data and reporting in different details as needed by various levels of management.
  • Control includes following of the progress, follow up actions and expediting.
  • Control is more of a decentralized activity which is to be exercised at shop floor level. However in certain aspects either guidance from the management is needed or even centralized control is needed.

Advantages and limitations of PPC

Production planning and control function is the nerve centre or heart of the production system because of the following reasons.

  • It coordinates all phases of the production / operating system.
  • An efficient system of production planning and control results into better quality, optimum utilization of resources, lower level of inventories, reduction in production cycle time, faster delivery, more efficient customer service, lower costs of production, and lower capital investment etc.
  • It also leads to more efficient use of resources which results into higher productivity, economy in production, quality of goods or services, and timely delivery etc.
  • It results into higher sales, more profits, increase in market share, increase in competitive advantage etc.
  • As a result of systematic planning and control which has been integrated with maintenance plans, equipment breakdowns are minimized, maintenance is improved, excess capacity and idle time is minimized and steady flow of products is maintained.
  •  It contributes significantly increasing the good will and image of the organization.

In spite of several benefits of production planning and control, it has certain limitations. These are as follows

  • Production planning and control is based upon certain assumptions or forecasts about level of demand, availability of materials, technological progress, govt. policies etc. If these assumptions go wrong the production planning and control function may turn out ineffective.
  • It is a time-consuming exercise.
  • It becomes a difficult exercise especially when external environmental factors changes very rapidly.
  • The employees may resist changes when planning involves several changes.

Comments on Post (2)

  • D S Sastry

    The paper covers all activities of PPM in detail and is very useful guide to all in Steel Industry.
    I submit the following observations of mine:
    1.Deciding the product mix based on the inputs from market trends/surveys is also an important activity of PPC.
    2.PPC plays an important role in deciding Logistics for movement of Raw materials and Finished products.

    • Posted: 07 October, 2013 at 12:41 pm
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  • M S Ansari

    In most of the steel plants,Production Planning & Control has been reduced to Production Monitoring & Reporting.
    Some thought required how to correct it…

    • Posted: 12 October, 2013 at 05:13 am
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