A runbook, not a diagram
Most explanations of the production planning process show a tidy circular diagram and stop there. That is not what a planner needs. What actually helps is a runbook — the concrete steps a real planning cycle moves through, what happens at each, and what document comes out. Whatever the industry, a disciplined cycle follows the same nine steps, from a sales plan at the top to a tracked work order on the floor and continuous replenishment underneath. For the model behind it, see the production planning pillar; this page is the step-by-step.
1. Capture demand
The cycle starts with a sales or production plan for the horizon. Demand arrives in one of two forms: a forecast (make-to-stock, where finished goods are replenished to target levels) or confirmed customer orders (make-to-order, planned against each order’s own BOM). The most common real case is a mix of both in one run. Getting this right matters more than anything downstream — demand quality caps plan quality, so a plan seeded from confirmed order acceptances beats one built on re-keyed guesses. See sales & production plan.
2. Explode through the BOM
The engine explodes each finished good’s demand through its bill of materials — level by level, from finished good to sub-assembly to component to raw material — to derive gross requirements for every item in the tree. A multi-level explosion is what makes the difference: it captures the fact that one assembly needs three of a sub-assembly, each of which needs two of a component, and so on. Accuracy here depends entirely on the BOM being current after any engineering change.
3. Net against supply
For each exploded item, MRP subtracts stock on hand, open purchase orders, open work orders and reserved stock to reach the net requirement. Stock can be reserved to this plan so it is not double-allocated to another. This is the step that turns a wish into a plan: only the genuine shortfall survives netting, so nothing is bought or built that you already have or have coming.
- Net requirement = gross demand − stock on hand − open supply, applied at every level.
- Reserve stock to a plan so two plans never spend the same inventory.
- Zero or negative net means the item is already covered — no document is raised.
- Lead times decide the timing of each surviving requirement, not just the quantity.
4. Split buy versus make
The netted requirement divides along the procurement method of each item. Raw-material and bought-out shortfalls go to the raw-material / bought-out plan (the buy side). In-house sub-assemblies and outsourced components go to the component plan — SFG for semi-finished goods made in-house, OSL for items sent out for processing. Planning outsourced work as its own category is what lets a shop schedule around a job-worker’s lead time instead of discovering the delay late.
5. Generate PR and WO
Now the plan produces real documents. Buy-side shortfalls become purchase requisitions handed to purchasing; make-side shortfalls become work orders, each carrying a WO specification / routing — the sequence of operations, each on a machine or work centre with standard cycle and setting times. A netted line is not just a report entry; it is the source record for the execution document that closes it.
| Step | Action | Output / record |
|---|---|---|
| 1 Capture | Enter or import the sales/production plan | Sales plan (demand) |
| 2 Explode | Explode each FG through its BOM | Gross requirements |
| 3 Net | Subtract stock and open supply; reserve stock | Net requirements |
| 4 Split | Divide net into buy vs make | RM/bought-out & component plans |
| 5 Generate | Raise PR and WO with routing | Purchase requisitions & work orders |
| 6 Schedule | Set priority; load finite capacity; Gantt | Sequenced schedule |
| 7 Print | Issue job cards / WO specs | Job cards |
| 8 Track | Book completion and consumption | Plan-vs-actual, WO history |
| 9 Replenish | Watch stock vs reorder points | Auto-suggested PRs |
6. Schedule
Work orders exist, but existence is not a sequence. Scheduling sets or re-sequences work-order priority — by due date, customer or setup similarity — and lays the orders out against finite machine capacity on a Gantt board, so overloads are levelled before they miss a date. This is the control half of the process, and it is where planning becomes a schedule the floor can actually run. See scheduling & priority (Gantt) and planning versus scheduling.
Want to walk this cycle on your own plant’s data?
In 30 minutes we run steps one through nine on your demand, BOM and stock — you watch a sales plan become netted requirements, purchase requisitions, scheduled work orders and job cards.
7. Print and release
Released work orders are printed as job cards — individually or in batch — carrying the routing and the quantities the floor needs. Batch job-card printing matters in a busy shop where dozens of orders release together. See process sheets & routing.
8. Track completion
As the floor works, operators book progress against each work order — reporting completion and booking material consumption back against stock, ideally by scanning shift, machine and operator barcodes. That closes the loop between plan and reality: work-order history shows status and ageing, and plan-vs-actual and OEE dashboards show whether the standard times the plan assumed held up. See IoT / machine-data capture and plan vs actual & OEE.
9. Replenish continuously
The cycle does not truly stop and restart — underneath it a reorder-level dashboard runs continuously, watching free stock against each item’s reorder point and proposing a purchase requisition automatically the moment stock dips below it. This is the safety net that catches fast-movers and unplanned draw-down between formal runs, so the shop is never waiting for the next planning cycle to notice a stockout.
How Fast Planning runs the cycle
Fast Planning Software implements all nine steps on one shared platform, built by Improsys in Pune under the Fast Technology brand and deployable cloud or on-premise. Demand entry, BOM explosion and netting with reservation, the buy/make split into purchase requisitions and work orders, finite loading and Gantt scheduling, batch job-card printing, barcode completion, and a continuous reorder dashboard — each step a real record the next reads, with no interface to production, inventory and purchase. To go deeper on the engine, read what is MRP; on the payoff, the benefits.
Frequently asked questions
What are the steps in the production planning process?
A disciplined cycle runs through nine steps: capture demand as a sales or production plan; explode each finished good through its BOM; net the requirements against stock and open supply; split the net into buy versus make; generate purchase requisitions and work orders; schedule by priority against finite capacity; print and release job cards; track completion and consumption; and replenish continuously through a reorder dashboard. Each step produces a real record the next step reads.
Where does the production planning cycle start?
It starts with demand — a sales or production plan for the horizon, either a forecast for make-to-stock or confirmed customer orders for make-to-order, often a mix of both. This step matters most because demand quality caps plan quality: a plan seeded from confirmed order acceptances is far more reliable than one built on re-keyed figures.
How does a plan become a work order?
After netting, in-house and outsourced component shortfalls form the component plan (the make side). Those netted lines are the source records for work orders, each carrying a routing of operations with standard cycle and setting times. Raw-material and bought-out shortfalls form the buy side and become purchase requisitions instead. So a netted line is not just a report — it materialises directly as the execution document that closes the shortfall.
What is the difference between the planning and scheduling steps in the cycle?
Planning (steps one to five) decides quantities and dates — what to make and buy and how much — by exploding the BOM and netting. Scheduling (step six) sequences the resulting work orders onto machines and days by priority, against finite capacity, on a Gantt board. Planning assumes capacity; scheduling respects it. Both are needed: the quantities planning suggests are only useful once they are loadable onto real machines.
What keeps the shop supplied between planning runs?
A live reorder-level dashboard runs continuously beneath the formal cycle, watching free stock against each item’s reorder point and proposing a purchase requisition automatically the moment stock dips below it. It is the day-to-day safety net that catches fast-moving items and unplanned consumption, so the shop is not waiting for the next planning run to notice a shortage.