Companies that plan well are much better prepared for the future and for dealing with abnormalities in their industry.

Senior management should be actively involved in the planning process and ultimately feed the lower plans of the business. By properly planning at multiple levels, your company will see added benefits to cost, quality and customer satisfaction.

The planning process really begins with the company's mission statement. This statement gives a general description of the company and its goals. This mission statement should feed the overall businesses plan where senior management outlines where the company stands, where they're going and how they plan on getting there.

The business plan is the motor that keeps the whole company going. Every action the company takes should be in line with this strategy. The business plan should cover several years but should be revisited and re-edited on a yearly basis.

Business Planning Meetings

On a monthly basis, your sales and production teams should get together in what is typically called the "Sales and Operations Planning" meetings.

In many ways, these are the most important meetings that take place. During these meetings, your sales team should finalize their sales plan, outlining what they plan to sell for the upcoming months. The sales plan should include aggregate planning of various products and be based on multiple factors. The production team will create a production plan, which is a future outline of what is to be produced in order to satisfy the sales plan. These plans should be in congruence with the overall business plan. The sales and production plans are crucial, because they feed lower level planning, where money and resources are expended.

From the sales and production plan, the person responsible for planning will create a master schedule. The master schedule contains detailed daily, weekly or monthly plans for production. These are actual outputs expected in order to satisfy the production plan. The master schedule will include necessary resources in order to complete the plan. The accuracy of the master schedule is crucial because it is what feeds the purchasing of materials and the scheduling of labor. In addition, the sales plan will provide a framework for what the sales team plans to sell.

After the master schedule is created, the resources to complete the plan need to be verified. The scheduler needs to check the amount of output needed versus the available capacity. Do more materials need to be ordered? Do we have enough labor to complete the plan? Can our equipment handle the expected workload? These are all questions that need to be addressed before the master schedule can become final. This is also called material requirements planning.

Once the master schedule is final, materials can be purchased, labor can be scheduled and the plan can become action. On a daily level, you can release dispatch lists, which may have minor changes to the schedule. In general, you don't want to make too many changes inside of a critical period.

You should be constantly monitoring actual output versus expected output. In addition, you want to verify that the sales team is actually selling what they planned on selling. If this number is higher or lower than expected, changes to the schedule may need to take place.