Material Planning

In any integrated Materials Management environment, planning for getting the materials is the starting point for the whole MM function. Materials planning sets the procurement function and the subsequent material functions rolling.


Material planning is a scientific way of determining the requirements starting with raw materials, consumables, spare  parts and all other materials that are required to meet the given production plan for a certain period.
Material planning is derived from the over all organisational planning and hence it is always a sub-plan of the broad organisational plan.
What it does is forecasting and initiating for procurement of materials

Factors affecting Material planning :

1) Macro factors : Global factors such as price trends, business cycles, government's import and export policies etc are called the Macro factors. Credit  policy of the government is a critical factor as banks follow these guidelines only while extending financial support to a business entity.

2) Micro factors :
These are essentially the factors existing within  the organisation such as corporate policy on Inventory holding, production plan, investments etc. For any organisation, factors such as Lead

      Must read these......
Purpose of MRP
Requirements of MRP
Major assumptions of MRP
Implementation of MRP
Advantages of MRP

time of procurement , acceptable inventory levels, working capital, seasonality, delegation of power are micro factors.
Techniques of planning materials :
There are a few techniques used for planning material for the given period. The following two are , however, commonly used :


1) Materials Requirement Planning (MRP)
2) Requirement based on past consumption

MRP has ,as its starting point, the annual production plan of the manufacturing concern. Once a firm  determines its annual production plan , the over all material requirement , to meet the given production plan, is worked out. It is a detailed analysis encompassing the materials and quantities available for use, materials with quantities not available and

hence needing procurement, the  actual  lead  time of procurement etc.

Since , it is always possible to have a situation where some  parts  of  an  assembly  are  available  and some others not available, Bill of Materials is exploded. It is quantifying all the materials (components) needed for various assemblies , all needed as per the production plan. BOM is thus a list displaying the code, nomenclature of an item , its unit and quantity , location of use and also the estimated price of each component. An explosion chart is a series of bills of materials grouped together in a matrix form so that combining the requirements for different components can be made.

Once the BOM is ready , the same is handed over to the Purchasing wing which initiates the purchasing acivities. MRP thus keeps in view the Lead time also. Using computers, preparation of BOM through explosion of lists is quite easy and smooth.