Production Planning

and Control: Theories

and Best Practices
HENDRO WICAKSONO
 I. World’s Defense Industry
II. Why Production Planning and
Control?

Contents III. Production Planning and

Control Tasks and Techniques
IV. Implementation Ecosystems:
Innovation and Digital
Ecosystem
 I.
World’s Defense
Industry

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 Largest arms exporters
16 Australia 961
Rank 2016- 2016- 17 Canada 746
2021 Supplier 2021 18 UAE 671
1 United States 62367 19 Belarus 597
2 Russia 32130 20 South Africa 534
3 France 16565 21 Brazil 519
4 China 8708 22 Norway 494
5 Germany 8660 23 Czechia 390
6 United Kingdom 5386 24 India 348
7 Italy 4803 25 Portugal 291
8 Israel 4789 26 Jordan 227
9 South Korea 4313 27 Indonesia 222
10 Spain 3869 28 Finland 180
11 Netherlands 3027 29 Belgium 177
12 Turkey 1489 30 Serbia 128
13 Ukraine 1457
14 Sweden 1333 (SIPRI 2021)
15 Switzerland 1174

PROF. DR.-ING. HENDRO WICAKSONO – PRODUCTION PLANNING AND CONTROL: THEORIES AND BEST PRACTICES
 Largest arms importers
Rank 2016-2021 Recipient 2016-2021 16 Viet Nam 2730
1 India 18393 17 Indonesia 2696
2 Saudi Arabia 17906 18 Singapore 2511
3 Egypt 9472 19 Italy 2405
4 Australia 8320 20 Turkey 2368
5 China 7698 21 Norway 2340
6 Qatar 7098 22 Netherlands 1903
7 South Korea 6702 23 Thailand 1871
8 Algeria 6402 24 Bangladesh 1825
9 Pakistan 4908 25 Oman 1653
10 UAE 4734 26 Morocco 1638
11 Japan 3921 27 Afghanistan 1454
12 United States 3686 28 Philippines 1405
13 United Kingdom 3656 29 Canada 1398
14 Iraq 3453 30 Kuwait 1381
15 Israel 3196
(SIPRI 2021)

PROF. DR.-ING. HENDRO WICAKSONO – PRODUCTION PLANNING AND CONTROL: THEORIES AND BEST PRACTICES
Top export destinations of German defense
industry

(Statista 2021)

PROF. DR.-ING. HENDRO WICAKSONO – PRODUCTION PLANNING AND CONTROL: THEORIES AND BEST PRACTICES
 Top exporters
Top Machine Tool Exporters Top Chemical Exporters 2021 Top Car Exporters 2021
Ra Country Value (Billion Ra Country Value (Billion
nk USD) nk USD)
1 China 106.2 (16.4%) 1 Germany 139.1 (19.6%)
2 United 56.4 (8.7%) 2 Japan 85.6 (.12%)
States 3 United 54.7 (7.7%)
3 Germany 44.6 (6.9%) States
4 Ireland 38 (5.9%) 4 South 44.3 (6.2%)
5 Belgium 34 (5.2%) Korea
5 Mexico 30.9 (5.6%)

(World's Top Exports 2022)

PROF. DR.-ING. HENDRO WICAKSONO – PRODUCTION PLANNING AND CONTROL: THEORIES AND BEST PRACTICES
Top 100 world companies in defense industry

(SIPRI 2021)

PROF. DR.-ING. HENDRO WICAKSONO – PRODUCTION PLANNING AND CONTROL: THEORIES AND BEST PRACTICES
 II.
Why Production
Planning and Control?

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The triangle of production objectives
Costs Low production costs

Quality

High product quality

short lead times in the production and order processing

Time [Himpel 2004]

PROF. DR.-ING. HENDRO WICAKSONO – PRODUCTION PLANNING AND CONTROL: THEORIES AND BEST PRACTICES
What make production very complex?
Market demands
• Short product lifecycle
• Fluctuating variation
Variety
• Product variation
• Alternative production process
Coordination • New materials
• Production in multiple location
• Synchronous delivery
• Just in Time Quality
• Globalization
• Security
• Tolerance
Restrictions • Maintenance costs
• Environment friendliness
• Resource efficiency
• Regulations

PROF. DR.-ING. HENDRO WICAKSONO – PRODUCTION PLANNING AND CONTROL: THEORIES AND BEST PRACTICES
What is production planning and control (PPC)?
customer
Methods and tools to plan, schedule, and
control activities within the transformation of
inputs into outputs (products and/or services). item
customer view
• volume
order product
volume
• time limit
manufacturer
time limit

view process

capacity
unit
item labor production facilities

PROF. DR.-ING. HENDRO WICAKSONO – PRODUCTION PLANNING AND CONTROL: THEORIES AND BEST PRACTICES [H.-H. Wiendahl]
 Planning vs. control
Production planning Production control

Image: SAP Image: agidens

✓ What to produce? The outputs ✓ How best to produce Execute against plan
✓ How much? The quantity/volume it?
✓ When? Time frame ✓ What are the Priorities, constraints,
challenges/problems conflicts, errors
✓ Where? Location, machine
in execution?
✓ Who? Human resource
✓ What is the state? Monitoring, tracking
✓ How? Materials, tools

PROF. DR.-ING. HENDRO WICAKSONO – PRODUCTION PLANNING AND CONTROL: THEORIES AND BEST PRACTICES
What could happen if there is no production
planning and control?
Delayed production
and delivery

Unorganized
Mismanagement
working

Time and resource

Low productivity wastage

PROF. DR.-ING. HENDRO WICAKSONO – PRODUCTION PLANNING AND CONTROL: THEORIES AND BEST PRACTICES
General terms of planning
beginning of closing date
planning short term
medium term
long term
planning horizon

planning time
duration of unit
planning planning frequency

horizon period of time for which the planning is valid

frequency number of planning executions per unit of time with constant
planning horizon
planning unit fractions of time in which the horizon is split
closing date the day from which on the planning is valid
duration span of time which is necessary to create a plan
object subject of the planning

[Nyhuis]
 II.
Production Planning
and Control Task and
Techniques

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Production planning and control hierarchy
Demand Forecasting

Capacity planning Workforce planning

Strategic

Aggregate planning

WIP/ quota setting Material requirement planning Tactical

Sequencing & scheduling Order management

Shop floor control

Control

Production tracking
[Hopp & Spearman]
Demand Forecasting
Objectives

▪ To estimate the types and quantities of future demand of production

▪ Prerequisite for every planning process since planning requires basis of known or assumed quantities.

Inputs

Marketing and sales information, e.g. external factor (interest rates, average income, policies),
historical demands

Outputs
Future demands, e.g. quantity

PROF. DR.-ING. HENDRO WICAKSONO – PRODUCTION PLANNING AND CONTROL: THEORIES AND BEST PRACTICES
Demand forecasting
Forecasting
techniques

Historically oriented Future oriented

techniques techniques

quantitative qualitative quantitative qualitative

techniques techniques techniques techniques

Examples:
▪ Time series analysis ▪ extrapolation from ▪ Delphi method
▪ Regression ▪ manual forecasting known demand ▪ Surveys among
▪ Deep learning (“eyeballing”) customers and/or
▪ Causal industry experts

PROF. DR.-ING. HENDRO WICAKSONO – PRODUCTION PLANNING AND CONTROL: THEORIES AND BEST PRACTICES
 Start

Demand Find historical Find a similar Similar product

yes
Historical analogy

Forecasting data product exists?

Framework Historical data exist?

no
Regression
no Other qualitative methods
(market research, delphi,
consensus)
yes
Holt Winters
no yes
Time series? yes
Methods for multiple settings: Seasonal pattern? SARIMA
▪ Deep learning, e.g. LSTM yes no GAM/Prophet
▪ Causal machine learning
Plot data/ find
Trend exists?
pattern yes

no
Finish

Calculation and Simple Double

comparison of Moving average exponential ARIMA exponential
forecast errors smooting smooting

PROF. DR.-ING. HENDRO WICAKSONO – PRODUCTION PLANNING AND CONTROL: THEORIES AND BEST PRACTICES
Capacity planning
Objectives

To ensure that the production has adequate capacity including

machines, factory floor space, power supplies, air/water/chemical supplies,
spare parts, etc.

Inputs

Demand forecast

Outputs
The needs of equipment and facilities, decision to add/change/reduce the capacity

PROF. DR.-ING. HENDRO WICAKSONO – PRODUCTION PLANNING AND CONTROL: THEORIES AND BEST PRACTICES
Capacity planning
Traditional Modern

Production Production
feasible infeasible

Cycle time
Cycle time

100% utilization 100% utilization

There is no point where

Yes or No feasibility
production is infeasible
PROF. DR.-ING. HENDRO WICAKSONO – PRODUCTION PLANNING AND CONTROL: THEORIES AND BEST PRACTICES
Capacity planning
Resource types
▪ Products/materials
▪ Workforce
▪ Tools, e.g. machines, transportation, etc.

Strategies

▪ Lag strategy: based on true demand, not projected. Risk: delivery

Measure delay
▪ Lead strategy: based on demand forecast. Risk: waste resource
▪ Match strategy: based on both true and forecasted demand, adding
capacity incrementally
Formulate Analyze

[OptimoRoute 2021]
PROF. DR.-ING. HENDRO WICAKSONO – PRODUCTION PLANNING AND CONTROL: THEORIES AND BEST PRACTICES
Match strategy
Volume

Capacity level
(infrequent expansion) Demand forecast

Small chunk

Large chunk

Time

PROF. DR.-ING. HENDRO WICAKSONO – PRODUCTION PLANNING AND CONTROL: THEORIES AND BEST PRACTICES
Capacity planning methods and tools
• Decision tree: to choose the best decision to modify the capacity in long term, e.g. extend factory vs.
move factory vs. offshoring, etc.
• Utilization and cycle time: to measure the performance of a production facility, e.g. factory,
production line, production islands.
• Machine learning: capacity fulfillment prediction based on demand forecasts and resource utilization
data.

PROF. DR.-ING. HENDRO WICAKSONO – PRODUCTION PLANNING AND CONTROL: THEORIES AND BEST PRACTICES
Workforce planning
Objectives

To determine what labor is required to support a (long-term) production plan

Inputs

Demand forecast, capacity plan

Outputs
Labor plan, e.g. standard labor hours, extra labor hours

PROF. DR.-ING. HENDRO WICAKSONO – PRODUCTION PLANNING AND CONTROL: THEORIES AND BEST PRACTICES
Aggregate planning
Objectives
To specify the optimal combination of production rate, workforce level, inventory on hand,
subcontracting, etc.

Inputs

Demand forecast, capacity plan economic parameters (material costs, wages, subcontract costs)

Outputs
Aggregate plan: production units, inventory units, sales units

PROF. DR.-ING. HENDRO WICAKSONO – PRODUCTION PLANNING AND CONTROL: THEORIES AND BEST PRACTICES
Aggregate and workforce planning
Aggregate and Workforce
Planning Method

Mathematical Approach, e.g.

Cut and Try:
(Mixed Integer) Linear Programming,
Calculate all different scenarios
Reinforcement Learning

PROF. DR.-ING. HENDRO WICAKSONO – PRODUCTION PLANNING AND CONTROL: THEORIES AND BEST PRACTICES
Demand management
Objectives

To filter and adjust customer orders into a form that produces a manageable master production schedule

Inputs

Customer demands

Outputs
Master production schedule

PROF. DR.-ING. HENDRO WICAKSONO – PRODUCTION PLANNING AND CONTROL: THEORIES AND BEST PRACTICES
Material requirement planning
Objectives

To breakdown the aggregate production plan into number of parts, components, and materials
needed to produce a product (what, when, by whom, how many/much).

Inputs

Aggregate plan, master production schedule, bill of materials, inventory record

Outputs

Material plan: time and quantity to produce or/and to purchase

PROF. DR.-ING. HENDRO WICAKSONO – PRODUCTION PLANNING AND CONTROL: THEORIES AND BEST PRACTICES
Material requirement planning
Forecasts
Capacity
of demand
of
from
resources
customers

Orders
Aggregate
from
production
customers
plan

Engineering Inventory
design transactions
changes Master
productions
chedule

Bill-of- Material
Inventory
materials planning
records file
file (MRP)

MRP Explosion Method

PROF. DR.-ING. HENDRO WICAKSONO – PRODUCTION PLANNING AND CONTROL: THEORIES AND BEST PRACTICES
Example of Bill of Materials for MRP

Offroad Onroad
Military Military
1
Bike (A) Bike(B)

2 Frame (C) (1)

Frame (C) (1)

3 Wheel (D)(1) Wheel D (2) Wheel (D) (2)

Example of MRP Explosion
Sequencing and Scheduling
Objectives

To translate the master production schedule (MPS) into a work schedule that will be implemented
in near term, e.g. next week, day, or shift.

Inputs

Master production schedule

Outputs
Work schedule

PROF. DR.-ING. HENDRO WICAKSONO – PRODUCTION PLANNING AND CONTROL: THEORIES AND BEST PRACTICES
Sequencing and scheduling

Source: podsmart
PROF. DR.-ING. HENDRO WICAKSONO – PRODUCTION PLANNING AND CONTROL: THEORIES AND BEST PRACTICES
Shop floor control
Objectives

To control the real-time flow of material in accordance with the working schedule

Inputs

Working schedule

Outputs
Work in Progress

Image: Glassdoor

PROF. DR.-ING. HENDRO WICAKSONO – PRODUCTION PLANNING AND CONTROL: THEORIES AND BEST PRACTICES
Why shop growing
customer-specific
floor control? fluctuating orders on
variety of
products production
short term changes (e.g.
hand customer desired date)

high market short delivery

dynamics times

growing discrepancies deficient capacity queues in front of the increase of throughput times
between the original plan and synchronisation: work centres: and higher lead time
the current situation: bottlenecks • high process deviation:
frequently rescheduling inventory
cycles bad schedule reliability
• express orders
(Scherer)
PROF. DR.-ING. HENDRO WICAKSONO – PRODUCTION PLANNING AND CONTROL: THEORIES AND BEST PRACTICES
Tools for shop control
Daily dispatch list
Anticipated delay
report

Scrap reports

Tools for shop Status and exception

Rework reports
control reports

Performance
summary reports

Shortage list
Output/Input control
report
PROF. DR.-ING. HENDRO WICAKSONO – PRODUCTION PLANNING AND CONTROL: THEORIES AND BEST PRACTICES
 Daily dispatch list

Input/output control report

Status and exception report

PROF. DR.-ING. HENDRO WICAKSONO – PRODUCTION PLANNING AND CONTROL: THEORIES AND BEST PRACTICES
Production tracking
Objectives

To measure actual progress against the work schedule.

Inputs

Work schedule, production log, WIP

Outputs
Progress status.

PROF. DR.-ING. HENDRO WICAKSONO – PRODUCTION PLANNING AND CONTROL: THEORIES AND BEST PRACTICES
Production tracking

PROF. DR.-ING. HENDRO WICAKSONO – PRODUCTION PLANNING AND CONTROL: THEORIES AND BEST PRACTICES
 IV.
Implementation
Ecosystems
IV. A. Innovation Ecosystem
IV. B. Digital Ecosystem

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BY-ND
 IV.A.
Innovation
Ecosystems
European Collaborative Innovation Supported
by European Defense Fund (EDF)

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Innovation goals
• Collaborative R&D by including disruptive technologies: close technological gap
• Public-private partnership investments
• Synergies between civil, defence, and space research: reduce fragmentation of defence industry and
industrial landscape
• Integration of SMEs to defence industrial ecosystems
• Synergies between demand and supply sides

PROF. DR.-ING. HENDRO WICAKSONO – PRODUCTION PLANNING AND CONTROL: THEORIES AND BEST PRACTICES
Collaboration approach to defence capabilities
building

(Arbault & Gartier 2022)

PROF. DR.-ING. HENDRO WICAKSONO – PRODUCTION PLANNING AND CONTROL: THEORIES AND BEST PRACTICES
EDF: Support to entire innovation funnel

(The EDF 2021)

PROF. DR.-ING. HENDRO WICAKSONO – PRODUCTION PLANNING AND CONTROL: THEORIES AND BEST PRACTICES
European Defense Fund Implementation
Governance

(Arbault & Gartier 2022)

PROF. DR.-ING. HENDRO WICAKSONO – PRODUCTION PLANNING AND CONTROL: THEORIES AND BEST PRACTICES
Work Programme

(Arbault & Gartier 2022)

PROF. DR.-ING. HENDRO WICAKSONO – PRODUCTION PLANNING AND CONTROL: THEORIES AND BEST PRACTICES
How to encourage private sector in the
technology development?

(Arbault & Gartier 2022)

PROF. DR.-ING. HENDRO WICAKSONO – PRODUCTION PLANNING AND CONTROL: THEORIES AND BEST PRACTICES
 IV.B.
Digital Ecosystem
Gaia-X: Data Infrastructure for Digital
Ecosystem

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BY-ND
 What is Gaia-X?
Open, transparent and secure digital ecosystem, where data and services can be made available,
collated and shared in an environment of trust.
Actors: companies, research institutions, associations, administrations, and politics

Gaia-X Organization Pillars

Association Hubs Community

Develops policy and rules, technical Central contact points for interested parties: Everyone contributing to the
and regulatory frameworks think tank and grass root supporters establishment of a federated data
infrastructure.
PROF. DR.-ING. HENDRO WICAKSONO – PRODUCTION PLANNING AND CONTROL: THEORIES AND BEST PRACTICES (Gaia-X 2022)
Gaia-X core elements
Minimum technical requirements necessary to set
Federation Service up and operate a cloud-based self-sovereign data
infrastructure ecosystem.

Enables for the portability, interoperability, and

Standards connectivity of infrastructure, applications, data and
the service delivery

Data Spaces Relationships in data sharing and storage

Common rules for collaborations within and across

Business Services sectors to minimize challenges and risks, create new
services and opportunities for innovation and scaling

PROF. DR.-ING. HENDRO WICAKSONO – PRODUCTION PLANNING AND CONTROL: THEORIES AND BEST PRACTICES (Gaia-X 2022)
Federation Services

PROF. DR.-ING. HENDRO WICAKSONO – PRODUCTION PLANNING AND CONTROL: THEORIES AND BEST PRACTICES (Gaia-X 2022)
 Standards
What do standards enable?

• Interoperability between data

• Opportunities to user-friendly services
• Exchangability among different service providers in a sovereign data market
• Collaboration and data exchanges in cloud-edge environments

Types of standards
• Regulatory standards
• Industry specific standards
• Technical standards

PROF. DR.-ING. HENDRO WICAKSONO – PRODUCTION PLANNING AND CONTROL: THEORIES AND BEST PRACTICES (Gaia-X 2022)
Gaia-X data spaces

PROF. DR.-ING. HENDRO WICAKSONO – PRODUCTION PLANNING AND CONTROL: THEORIES AND BEST PRACTICES (Gaia-X 2022)