Material planning is a scientific technique of determining in advance the requirements of raw materials, ancillary parts and components, spares etc. as directed by the production programme. It is a sub-system in the overall planning activity. There are many factors, which influence the activity of material planning. These factors can be classified as macro and micro systems.
- Macro factors: Some of the micro factors which affect material planning, are price trends, business cycles Govt. import policy etc.
- Micro factors: Some of the micro factors that affect material planning are plant capacity utilization, rejection rates, lead times, inventory levels, working capital, delegation of powers and communication.
Techniques of Material Planning
One of the techniques of material planning is bill of material explosion. Material planning through bill of material explosion is shown below in Fig. 4.2.
The basis for material planning is the forecast demand for the end products. Forecasting techniques such as weighted average method, exponential smoothening and time series models are used for the same. Once the demand forecast is made, it is possible go through the excerse of material planning. Bill of materials is a document which shows list of materials required, unit consumption location code for a given product. An explosive chart is a series of bill of material grouped in a matrix form so that combined requirements for different components can be done requirements of various materials are arrives at from the demand forecast, using bill of materials, through explosion charts. Thus material requirement plan will lead to be the development of delivery schedule of the materials and purchasing of those material requirements.
Source: KumarAnil, Suresh N. (2009), Production and operations management, New Age International Pvt Ltd; 2nd Ed. edition.