Benefits of systematic production and purchase planning in Microsoft ERP

Introduction

From the point of view of a manufacturer, it is very ideal to have a system to compute the detailed planning for the organization in the field of production, purchase of materials and warehouse and inventory, and as a result, to know exactly what goods should be purchased at what time and when should they be shipped where. when this planning is done correctly and automatically, without human error, the production is done at the right time, materials and products are supplied and produced on time, the resources of the organization are optimally consumed, and finally the customers will also be satisfied, and thus the profitability of the organization will grow. This desirable demand in every production business – whether it is make-to-order or make-to-stock – is faced with complications that its implementation by the system requires special conditions in the organization that can be summed up in one word: “data integrity”.

The planning process, both at the level of purchase and supply and at the level of production planning to the level of workstations, requires multiple inputs that can cover the complexity of any business. These main inputs are related to online data in different areas that are related to all organizational resources.

Most of the organization’s resources are involved in the planning process; These resources include information on goods, machines, human resources, etc., and therefore, parameters related to these resources should also be included in the field of production planning and material purchase planning. For example, the planning parameters related to each product, such as the safety stock of the product and its re-order point, parameters related to the capacity of the production line and workstations and production manpower, inventory on hand and warehouse capacity, sales orders and delivery times, budget and demand forecast of the organization in a certain time period, current production orders, semi-finished products, etc.…. These are part of the many parameters in the field of planning that are related to organizational resources and these are the valuable data that can help the organization achieve its goals.

The complexity of production planning does not end here. Many manufacturers have outsourced some production operations, so this issue is also effective in purchasing and production operations.

Also, whether to buy an expensive commodity at the latest possible time or at the earliest possible time and in what volume (due to price changes) is another aspect of planning; Or for manufacturers whose production operation time for their products is long and more than a few days, each item must be called from the warehouse to the relevant station on the exact day and time, and the waiting time, queuing time, handling time, etc. The variety of manufactured goods are all things that will not give you the right output without the right input.

Therefore, two important points in planning are:

• Planning is a function of parameters and data from the entire organization’s resources and various operational processes, and for this reason, it is not possible to plan the purchase of materials/production by an island system whose input data is not from the entire organization.
• Planning in each group depends on the specific conditions of each industry, the condition of warehouses, suppliers, line capacity, etc. and therefore, no off-the-shelf solution can meet the needs of organizations at first. The solution of production planning and MRP should be tailored specifically for each organization so that the special conditions of that industry are fully included in it.

With these conditions, is it possible to systematically plan purchasing and supply and planning production? The answer is Yes, it is possible. But with the right ERP solution and with the right implementation services.

What are the implementation requirements of material purchase planning and production planning in organizations?

As mentioned in the introduction, comprehensive and online data from the organization’s resources are one of the most important issues in the planning category. These data as planning input parameters should be identified and used correctly for each raw material, final product, sales orders, purchase orders, orders in progress, inventory of warehouses, sales forecast of the organization, operational times, etc. Therefore, a suitable information infrastructure should cover the following and be always available online:

• Planning parameters for goods and products (such as order point, safety stock, organization capacity, supplier restrictions on each item, shipping and delivery times)
• Sales orders separately for each product along with the delivery and committed times
• The budget of the organization from the point of view of sales (demand forecast) separately for each product and each period
• Inventory on hand and inventory on the way separately for each product
• Restrictions on the warehouse side (such as warehouse capacity, tracking goods, reserving goods in the warehouse)
• Current schedule of the production line and orders in production, planned production orders and orders in the production queue, etc
• The capacity of workstations in the production line, work shifts and resources involved in production
• Operation time parameters such as production time, queuing time, handling time, etc
• Production operational parameters such as product waste, line waste, double work, batch size, etc
• The existence of a powerful computing engine in the field of planning to exploit this data and perform calculations separately for each product and each order.

These items are involved in planning in every organization due to their relevance, and despite these data and the correct logic of communication between them, you can expect the correct planning system in the field of purchasing, production and assembly, and accurate suggestions in terms of Give time and operations that become action and finally the operations of the organization go according to plan.

It is important to mention two points here:

• All of the above may not be relevant for an organization, for example, an order-oriented producer pays attention to sales orders and does not work with budgets and forecasts, and on the contrary, a warehouse producer focuses on the organization’s budgeting, and some organizations focus on both of these issues. They pay attention to planning. But it is important that the right system includes all the things so that it can also cover the future needs of the organization.
• Another thing is that maybe no organization has all these parameters and data accurately and completely or can calculate them to some extent. This is normal because the organization does not have access to a suitable infrastructure to collect and process data, and perhaps managers have not considered these parameters. But the important thing is that the path is right. Every organization can start working with the data in hand and in an approximate and average way and gradually make them more and more accurate to reach the ideal point.

The solution for implementation of purchase planning and production planning in organizations

According to what was mentioned in the previous sections, the requirements for planning in organizations were mentioned. The most important systems in the world that have the mentioned features as a standard and have the ability to manage the complexities of production planning and MRP are ERP (Enterprise Resource Planning) systems. ERP systems (enterprise resource planning) have the characteristic of integration and comprehensiveness, and in addition to comprehensiveness, they include the key processes of the organization as a standard, structured and coherent libraries in their hearts that solve the data problem in organizations structurally and also in businesses. Many and various have been implemented.

Standard ERPs are data-oriented solutions and can solve the problem of correct and online data of all the main processes needed in planning in the organization and become a reliable source for the organization. Note that ERP is initially a management concept, and then various tools have been developed by large software companies such as Microsoft on this concept.

Enterprise resource planning software (ERP) are systems that integrate data related to core business processes throughout the organization and provide it to users who need it at the right time based on access levels. Such a system allows all the people of a group to work together in perfect harmony even if they are geographically dispersed.

Therefore, by choosing the right system and implementing and deploying a standard ERP system, you will achieve the following results in the first place:

• Providing access to structured and consistent data from all the organization’s key data (purchasing, selling, warehouse, production, financial, project, etc.) online
• Availability of a standard space for entering important parameters in the category of purchase planning and production planning
• Implementation of the organization’s special solution, taking into account the unique conditions and complexities of each business
• Carrying out the main operations of the organization in the standard ERP framework (purchasing operations, sales operations, accounting financial operations, accurate cost calculation, inventory and warehouse management, service management, etc. in an integrated manner and based on APQC standards)

In addition to the above, standard ERP systems have a powerful calculation engine to perform calculations related to production planning and MRP. This computing engine has the ability to perform complex operations to consider all time, number and cost parameters, taking into account the operational limitations of the organization.

So it can be said that with the provision of these conditions (proper implementation of a standard ERP), it is practically possible to implement material requirements planning (MRP), workstation capacity planning and finally production planning for your business. Is. Standard ERP systems bring the conditions and implementation requirements of the planning category to your organization and can cover business needs in this area well.

Note that ERP solutions are not software solutions ready for immediate installation and use, and are specially implemented and configured for each organization. Therefore, the ERP that is installed in your organization will be a mirror of your organization’s scenarios along with the requirements and conditions of the organization, which, along with the standard methods of the system (Best Practices, the optimal way of doing things), will lead your organization towards a correct and coherent information structure for planning matters.

An overview of Microsoft Dynamics 365 Business Central ERP features in the field of production planning and material purchase planning:

According to the requirements and infrastructure needed for the implementation of production planning and material purchase planning and what was mentioned in the previous section, Microsoft’s ERP with the title Dynamics 365 Business Central is one of the powerful solutions for the implementation of planning in organizations and so far in several hundred Thousands of companies with different natures of activity have been implemented. In Microsoft’s ERP Business Central, the modules of sales and marketing, purchasing and supply, manufacturing and production, inventory and warehouse and other modules receive all the key parameters in the planning dimension mentioned in the previous sections and based on business conditions and scenarios and Relying on optimal and standard methods, it is configured.

Here we discuss the four key elements mentioned in the previous sections and how Business Central’s ERP system responds to these requirements.

1. Comprehensiveness and including all operational data from the organization in relation to the online and standard planning category, including data related to sales, warehouse, purchase, production, budget, etc.

2. Implementation and configuration specific to the conditions of each organization, which is the nature of standard ERP projects, including Microsoft’s ERP solution, and the main part of the project is analysis, configuration, and setting up the system according to the organization’s conditions. This configuration includes the implementation of the main business scenarios in the fields of finance, buying and selling, warehouse and inventory, manufacturing and production, service, project, etc. several months (and in some cases up to 1 year). The implementation and correct establishment of the ERP system in the organization is key and decisive for achieving the desired results.

3. Existence of detailed information structures to receive planning parameters for goods, products, suppliers, workstations, production shifts, etc.

4. A powerful calculation engine to perform calculations related to planning by taking into account the times and current obligations, inventory in hand and on the way, purchase and sale orders and budget in a dynamic and dynamic manner.

It should be noted that Microsoft’s ERP Business Central computing engine performs planning for the following four key operations:

• What goods should be produced on what date and in what amount? (Production planning)
• What goods should be purchased on what date and how much? (Planning material requirements)
• What goods should be moved on what date and how much? (planning of movements)
• What goods should be assembled on what date and to what extent? (assembly planning)

Conclusion:

Planning production and planning the purchase of MRP materials in a systematic way is one of the basic needs of many organizations, which must be done by considering all the resources of the organization, and it has an impact on important business performance indicators such as customer satisfaction, cost reduction, and profitability of the organization, hence it is necessary to be implemented. It is the existence of aggregated data from all the key processes of the organization, such as sales and inventory, and in addition to that, the relevant solution must be implemented specifically for each company, and at the same time, it must have a powerful computing engine to perform planning calculations and convert it into operational measures.

The most well-known system platforms and standards in the world for this purpose are ERP software, and Microsoft’s ERP Dynamics 365 Business Central, as an international standard ERP, has all the requirements mentioned for the implementation of planning in the field of production and MRP in your organization.

With proper implementation of this system, you can practically realize your vision in the field of production planning and the purchase planning of material needs in your business. This is not a distant prospect for your business and it has already been implemented in many countries of the world as well as in our country for many and diverse businesses.