Production - Inventory Planning 

The objective of this paper is to describe an approach to PRODUCTION-SALES-INVENTORY (PSI) planning that encompasses markets, production facilities, and inventory repositories spread across the globe...that works!

Generally speaking, PSI planning is a manifestation of the end item that is being furnished to our external customer in a mix array that provides a dollarized annual business plan that can be reviewed by executive (financial) and operations (units of product). These data are built from a "product family" viewpoint and are described by a produc­tion plan that is continuously updated so that it might appropriately drive the master schedule—-the starting element within the manufacturing environment.

From the above, we can state the basic objectives of PSI planning in action item terms within the business unit. They are:

A. Ensure validity of the master schedule.

B. Provide reconciliation of Marketing/Manufacturing/ Financial viewpoints to what the business entity should be concerned about.

C. Array information so that customer demands can be met.

D. Address the asset management aspect of inventories, as well as sales policy backlog targets that might be provided.

E. Provide review data for the measurement of historical performance in sales units and dollars, manufacturing units, and financial target realization.

As one reviews the PSI planning process, it becomes clear why this beginning activity is so critical to modern manu­facturing management techniques when viewed in light of ever-changing sales needs. Where the specific PSI objec­tives are met, we find the following elements are in balance:

A. Customer demand has been met.

B. Master scheduling remains stable so that good manu­facturing management performance can be accom­plished with minimum investment and maximum flex­ibility.

C. Inventory and backlog targets are accomplished and maintained.

To accomplish high quality PSI planning, we must review massive amounts of data. With this data structured in a well-organized format, planning becomes practical and a minimum amount of executive involvement is required. If we have sufficient computer hardware the job is less than

half done. The availability of appropriate software is not easily found. Several software packages provide "front end" or "order entry" modules that give some assistance, but do not go the full distance in creating a business planning tool of the magnitude necessary to operate from a common database.

As is the case with MRPII, PSI simply cannot be accom­plished if you try to assemble and present data in a manual way to be used in intelligent decision making.

To be Continued