Strategic Choice of Manufacturing Planning and Control Approaches: Empirical Analysis of Drivers and Performance

The design of manufacturing planning and control systems is a strategic decision for manufacturing firms. In this paper we analyze the interrelationships among the choices of planning and control approaches at different hierarchical levels, including sales and operations planning (chase; level), master scheduling (make-to-order; assemble-to-order; make-to-stock), material planning (time-phased; rate-based), and production activity control (MRP-type; JIT-type). We test the relationships with product characteristics and performance. These relationships are explored through a survey of 128 manufacturing plants. The results show that choice of approaches at the two higher planning and control levels, i.e. sales and operations planning and master scheduling, are strongly interrelated. The choices at the two lower hierarchical levels, i.e. material planning and production activity control, are also strongly interrelated. However, the link between any of the two upper and any of the two lower levels is much weaker. The most significant drivers of the choice of planning and control approach are: (i) product volume and delivery lead time for sales and operations planning, (ii) product variants and delivery lead time for master scheduling, and (iii) production lead time for production activity control, while material planning is not significantly related with any product characteristic. Significant effects on performance are found for sales and operations planning on volume flexibility, master scheduling on product mix flexibility, and material planning and production activity control approaches on delivery speed. This research supports the notion that sales and operations planning is concerned with volume planning and that master scheduling is concerned with mix planning.