Production Planning and Control

Production planning covers the coordination of everyday operational tasks such as scheduling, dispatching, inspections, quality checks, inventory management, and the allocation of supplies and equipment.

Control, on the other hand, ensures these activities are carried out efficiently and cost effectively by monitoring performance and correcting deviations.

While planning defines the objectives, strategies, and actions needed to satisfy market needs, control allows organizations to respond as conditions change by adjusting plans and processes in a timely way.

Together, planning and control help maintain appropriate inventory levels, ensure proper staffing, align production with demand, and keep operations running smoothly and efficiently. 

Production cost planning and control is a subset of production planning. It focuses on estimating and managing manufacturing costs before and during production. The goal is to ensure products are produced efficiently, with minimal waste, within budget, and at a cost that supports the market price of the goods.

Production cost plans outline all expected production costs, including materials, labor, overhead, equipment, and energy, and set targets, budgets, and standards for each stage of production. Production cost planning is closely tied to cost allocation, defining how costs are assigned, monitored, and controlled. 

Alignment across operations and job sites

Production cost plans should be built at a granular level by product, while also connecting plants, warehouses, and operational units to sales and supply chain plans. The goal is to ensure all production teams operate from the same assumptions by aligning production capacity, inventory, demand forecasts, and cost expectations across the enterprise. 

Visibility into operations and financials 

Accurate cost planning requires transparency into operational activities such as plant output, warehouse inventory levels, and manufacturing cycles, as well as financial outcomes like COGS and profitability by product line. This unified view helps teams understand how production decisions affect financial results. 

Cross-departmental collaboration

Production cost planning is not done in isolation. Finance must work closely with operations, procurement, logistics, and sales to ensure assumptions related to demand, throughput, and labor costs are shared, aligned, and consistently applied. 

Real-time data and scenario insights 

To plan effectively, teams need the ability to adjust assumptions quickly. Changes in material prices, demand shifts, or sales orders can significantly impact costs and profitability. Real-time data helps identify cost increases early, while scenario modeling enables teams to adjust plans or recover costs proactively. 

Alignment with operational goals 

Production cost plans should reflect broader business objectives such as profitability targets, inventory optimization, customer service levels, and growth strategies. Finance teams must connect production costs to strategic outcomes, not just line item budgets.

CCH Tagetik Production Cost Planning and Control software helps finance teams gain control over their production costs by unifying complex production landscapes with financial goals. We built this solution so that departments impacted by production costs, including logistics, manufacturing, purchasing, sales and finance, can align activities around realistic budgets optimized for profitability.  

Here's how: 

1. Connecting finance and operations

   The software automatically populates production capacity plans, production cost plans, and sales and operational plans with real-time cost data. All teams work from the same information and assumptions.

2. Containing COGS

   To support bottom-up cost calculations, the solution centralizes engineering, planning, manufacturing, sourcing, and finance data. Teams have real-time visibility into COGS and can immediately see the financial impact of changes in demand, material prices, or sales orders.

3. Improve profitability

   Whether finance needs to determine the P&L impact of production cost decisions, allocate costs across the production line, or play out what-if and variance analysis of scenarios, they don’t need to reach out to supply chain planners for information. The production cost information they need is all right there in the CCH Tagetik platform.