How to determine your optimal production program
Profit maximization through intelligent production planning
The planning of a optimal production program is one of the most challenging but also most rewarding tasks in industrial production. After all, those who use their resources efficiently, distribute existing capacities intelligently and actively manage bottlenecks can significantly increase the economic performance of their production. The question of the best mix of products, quantities and processes is becoming increasingly relevant, especially in the face of growing competitive pressure and increasing complexity in the product portfolio.
But what exactly does “optimal” mean in this context? Essentially, it is about choosing the combination from a large number of possible production decisions that achieves the highest possible contribution margin – i.e. maximizes the difference between revenue and variable costs. Numerous framework conditions must be taken into account: available machine capacities, personnel, materials, demand quantities, technical restrictions and much more.
How can an optimal production program be determined – with or without a bottleneck?
In the simplest variant, if there is sufficient capacity for all products, it is sufficient to prioritize the items with the highest contribution margin per unit. The production sequence results from the economic advantage. For example, the products with the highest profit margin can be prioritized as long as the market allows. This approach is particularly useful when capacity utilization is low or demand fluctuates greatly, for example in seasonal business areas.
The situation is different when production capacities are limited – whether due to machine running times, shift models or a lack of materials. This is referred to as a bottleneck scenario. In such cases, it is no longer sufficient to simply look at the contribution margin per product. Instead, it must be set in relation to the bottleneck resource required in each case – such as machine time per unit. This results in the so-called relative contribution margin, which shows which product generates the highest yield per bottleneck hour used. Based on this value, a production program can then be set up that makes the best possible use of the available bottleneck capacity.
An illustrative example: a product with a high individual contribution margin can be economically less attractive than another with a lower unit profit if it requires considerably more machine time. In practice, this means that the most profitable product is not always the one that should be prioritized for production in the event of bottlenecks. The best solution is therefore the one that maximizes the overall operating result with the available resources.
Mathematical planning: from gut feeling to calculation
With several products, several bottlenecks or additional constraints – such as minimum production quantities, delivery obligations or set-up times – the classic bottleneck calculation reaches its limits. This is where mathematical optimization methods come into play, in particular linear programming. It makes it possible to calculate target functions such as profit maximization, taking into account a wide range of restrictions, and thus precisely determine the optimum product mix. In practice, such calculations can be implemented either using specialized software solutions or spreadsheets with solver functions. Even if these methods appear complex at first glance, they offer companies enormous potential for improving profitability.
Strategic importance and continuous optimization
However, a one-time calculated production program is not enough. In dynamic production environments, capacities must be regularly reviewed, bottlenecks reassessed and production decisions adapted to current market conditions. Only those who continuously analyze their production data can react flexibly to fluctuations in demand or availability and still implement the most profitable production program.
In reality, production processes are often characterized by established structures, manual control and unused data sources. Switching to data-driven planning is not only a technical challenge, but also a strategic change in thinking. It opens up the opportunity to make production decisions objectively and based on facts – and thus ensure long-term profitability.
How Axxalon Flow supports you in optimizing your production program
With axxalon flow® provides companies with a modular MES system that has been specially designed to meet the challenges of modern production planning. By integrating advanced planning algorithms, powerful capacity and bottleneck management and an intuitive user interface, companies can not only calculate their production program, but also adapt it dynamically.
Thanks to the intelligent combination of visual order management, real-time bottleneck detection and graphically supported prioritization, axxalon flow® enables consistently transparent and economically optimized production program planning. The modular structure allows a step-by-step introduction and integration into existing IT landscapes – without replacing existing ERP systems. This creates planning reliability, efficiency and maximum transparency with minimum effort.
Determine the optimum production program now – explained step by step!