What does a planning strategy of "Planning with Consumption" mean?

The concept of "Planning with Consumption" refers to a planning strategy where planned orders are adjusted or consumed based on actual sales orders. This means that when sales orders are received, they take precedence over the planned production, allowing for a more responsive production schedule that aligns closely with actual demand.

The rationale behind this strategy is to minimize overproduction and excess inventory by directly linking planning activities to real-time sales activities. As actual sales occur, they effectively "consume" or reduce the quantity of planned production that has been established, ensuring that the manufacturing process remains agile and closely tied to market needs. This approach helps optimize resource utilization and enhances customer satisfaction, which is crucial for maintaining a competitive edge.

Understanding this concept plays a vital role in effective production planning as it emphasizes the importance of aligning supply with real-time customer demand rather than relying solely on forecasts or planning data that may not reflect the current market situation. This strategy is commonly utilized in environments where demand is variable and unpredictable.