Material Planning: Make Inventory More Effective

Material planning collaboration happening between two coworkers on paper and computers

 

How can companies in the aerospace industry prepare their inventory before beginning production? Material planning, also referred to as Material Requirements Planning (MRP), is a helpful system used by many manufacturing companies to forecast and prepare their inventory for production and customer demand. Using material planning also makes it easier to effectively account for inventory ordering time and production lead time. Material management can make any company more efficient and productive. While important across every industry, aviation companies can especially benefit from this detailed planning system for their materials management as it can ensure the right materials are on hand at the right time, which can be paramount during AOG times.

 

The Material Planning Process

Simply put, material planning helps gather all the requirements needed for production in order to better plan for future customer orders. Many employees have jobs that will aid in material planning, but the material planner, the main employee in charge of material planning, will coordinate all parts of the process.

To begin material planning, companies must use forecasting techniques, which, depending on the company, can include analyzing trends in ordering, the bill of materials, current inventory stock, production lead times, and buying patterns in the industry to predict how much inventory to order. The material planner will manage efforts to analyze this data and, with it, return the overall plan for more effective scheduling, production, and inventory. This plan will account for all the materials required for production, as well as include reports to establish the responsibilities of each department and a production schedule to detail the time it will take to complete the product.

There are many ways companies in the aerospace industry can take advantage of material planning. For example, an aviation company could use material planning before beginning production of an aircraft; then they are prepared for any situation. The company would first review their business and accounting data to help predict how much inventory or time they’ll need. Assuming their data is accurate, they might find that a certain material they’ve purchased in the past is still in their inventory, so they don’t need to purchase more. Or they may find that their customers aren’t currently buying a specific product, and they don’t need to produce as much as they have in the past. This helps them avoid spending time and money producing unnecessary parts that will deplete available storage space. They might even discover that a material or part can ship faster than anticipated or they need less production lead time than anticipated. Any of these discoveries will lead to better uses of the company’s money and time.

 

The Importance of Accuracy

If your company has completed an accurate material planning, the material planner will have ensured that your inventory balances reflect your actual numbers, accounted for the time it will take for products to arrive and be assembled, and reevaluated your current resources—such as your production capacity and vendors—to see what can be improved and what costs can be reduced. Without these precautions checked, your company will risk faulty forecasting. And any mistake in forecasting could lead to an inaccurate inventory and increased company costs.

 

Material Planning Brings Success

By meeting the standards of material planning, any aviation company will be more likely to succeed. Not only does material planning aid in preparing company inventory, it also increases company productivity and decreases unnecessary expenses. Having this system in place will lead to accurate production lead times, on-time orders, lower bills, and happy employees in addition to happy customers. Follow the material planning process outlined above to increase your company’s ability to succeed in the aerospace industry.

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