Production Planning for Small Factories (2026): From Excel to a Working System

Monday morning, the production manager gets a rush order from sales with one question: “Can we ship by Friday?” The answer is usually “probably,” because nobody knows for sure whether there’s enough material, when the machines are free, or when the existing backlog will finish. On Thursday it turns out the packaging has run out. Delivery slips, the customer is unhappy, and the team works overtime to catch up.

Production planning means deciding in advance what to make, how much, when, with which materials, and with how many machines or people, so you deliver on time without holding more stock than you need. It sounds like a big-factory concern, but small factories with a few dozen people benefit the most: resources are tight, so one small mistake ripples through everything.

This article is hands-on, step by step, from working in Excel to moving onto a system.

The 5 layers of production planning

Good planning doesn’t start with the machine schedule. It works from the big picture down to the detail.

Skip the upper layers and the daily schedule gets torn up every day, because there’s no larger framework holding it.

Step 1: Simple forecasting a small factory can do

You don’t need complex statistics. Start with the data you already have.

1. Pull monthly sales history for at least 12 months, by product or product group.
2. Use a moving average, such as the last three months, to smooth out unusual months.
3. Adjust for seasonality. Many businesses in Southern Thailand have clear seasons: the tourist high season, festivals, or harvests of crops like rubber and fruit.
4. Add input from sales: advance orders, large customers in negotiation, planned promotions.
5. Review every month. Compare the forecast with actual sales and refine the method.

A forecast will never be perfect. The goal is to be wrong less often and to notice quickly when you are.

Make to stock or make to order?

Many small factories do both, so keep them clearly separate:

• Make to stock: regular products, with quantities set by the forecast and a safety stock.
• Make to order: custom or OEM products, driven by confirmed orders, though shared raw materials still need forecasting.

Step 2: Build a master production schedule (MPS)

The MPS turns forecasts and orders into weekly production quantities for each finished product.

The basic logic per product per week:

• Demand = the larger of the forecast and confirmed orders for that week
• Projected stock = opening stock + planned production − demand
• If projected stock falls below your safety stock, plan additional production in your standard batch size

An MPS layout you can build in Excel:

The key tip is to freeze the near-term plan. For example, this week and next week can’t change without approval from someone with authority, so the line isn’t reshuffled every day.

Step 3: BOM and material calculation

Once you know what to make and how much, the next step is working out which materials you need. That requires an accurate BOM (Bill of Materials), or production recipe.

A usable BOM includes:

• Every raw material, packaging item and component, with quantity per unit produced
• Expected waste, such as trimming, evaporation or packing losses
• Semi-finished goods, if there are several levels
• The purchasing lead time for each material

Then apply the MRP logic: gross requirement − stock on hand − open purchase orders = quantity to order, with order dates offset by lead time. The usual problem isn’t the formula; it’s a BOM that wasn’t updated when a recipe or supplier changed. The BOM needs an owner and version control.

Step 4: Check capacity

A plan with materials ready still fails if there aren’t enough people or machines. A simple capacity check:

1. Identify the bottleneck, usually the slowest machine or station, such as the filling machine, cooking kettle or oven.
2. Calculate available capacity: working hours per week minus changeovers, cleaning, maintenance and breaks.
3. Calculate required capacity: production quantity × time per unit + changeover time.
4. Compare. If required exceeds available, choose between adding a shift, overtime, rescheduling some jobs, or subcontracting.

You don’t need to check every station. Focusing on one or two bottlenecks already helps a lot.

Step 5: Daily production scheduling

The daily schedule turns the weekly plan into an actual job sequence on each machine. Principles that work for small factories:

• Group jobs that share a machine setup, for example mild recipes before spicy ones, to cut cleaning time.
• Sequence by due date, nearest first, unless setup reasons justify otherwise.
• Leave slack. Don’t schedule 100% of capacity, because breakdowns and absences always happen.
• Check readiness before releasing a job: materials, packaging, labels and people must be ready before it hits the line.
• Record actuals every day: output, waste and the reasons for downtime, to improve the next plan.

A whiteboard at the line is still useful even with a system, because everyone sees today’s target the same way.

From Excel to a system: when and how

Excel is a good starting point and works well for many factories early on. Problems appear when:

• Products and recipes grow until the file is slow and formulas break
• Several people edit the file at once and data collides
• Actual stock doesn’t feed into the plan, so it’s calculated from old numbers
• You need lot tracking and cost per production order

A disruption-free migration

1. Clean up the BOM and product master in Excel first. A new system is only as good as the data you put in.
2. Choose a system connected to real stock. Planning needs live stock levels, not end-of-day entries.
3. Start with one product group. Run the system alongside Excel for a while, compare results, then expand.
4. Have line supervisors record actual output on a tablet or phone instead of passing paper around.
5. Set planning rhythms, such as a planning meeting every Friday and a forecast review at the start of each month.

The system could be the production module of an ERP, or a purpose-built MRP connected to your existing accounting software. For an overview of factory modules, see our ERP for factories guide, and to compare off-the-shelf and custom options, see popular ERP software compared.

Common production planning mistakes

• Planning from orders alone, with no forecast, so materials can’t be bought in time when orders arrive together
• A BOM that doesn’t match the shop floor: recipes change but the system doesn’t, so stock and costs drift
• Planning at 100% capacity, leaving no room for rush jobs or surprises
• Changing the plan every day, with no frozen window, so the line loses time to frequent changeovers
• Not recording actuals, so you can’t tell whether the plan failed because of the forecast, materials or machines
• Sales and production not talking. Hold a short weekly meeting to agree on one set of numbers.

Frequently Asked Questions about production planning

What’s the difference between production planning and MRP?

Production planning is the whole process from forecast to schedule. MRP is one part of it: calculating how much material and components to buy or make, and when, based on the MPS and BOM.

What is an MPS?

The master production schedule states how many units of each finished product to make in each week. It links the sales forecast to material purchasing.

Is Excel enough for a very small factory?

With few products and one planner, Excel works. Once recipes multiply, several people edit data, or you need lot and cost tracking, a system greatly reduces errors.

How many weeks ahead should we plan?

It depends on your longest material lead time; the plan must reach further than the time it takes to order that material. Small factories typically start with 4 to 8 weeks and freeze the first 1 to 2.

Rush orders keep interrupting us. What should we do?

Reserve some capacity for rush jobs, set rules on who can approve inserting a job, and tell sales how it affects other orders.

What data do we need before starting a production planning system?

At minimum: a product master, an accurate BOM, opening stock, material lead times and capacity data for your bottleneck stations.

Summary: plan from the big picture down, then review regularly

Production planning for a small factory doesn’t have to be complicated. Start with a simple forecast, build a weekly MPS, use the BOM to calculate materials, check capacity at the bottleneck, and schedule daily with some slack. When Excel can’t keep up, move onto a system connected to real stock, one product group at a time.

The Southern Whale freelance team designs MRP and production planning systems that match how your shop floor really works, connected to your stock and existing accounting software. See our MRP system service, or send us the planning file you use today and talk it through on LINE OA.