Resource Planning

Resource Planning: A Comprehensive Guide for CPIM Exam Success

Resource Planning is a critical component of the Sales & Operations Planning (S&OP) process. It serves as the bridge between high-level strategic plans and the detailed capacity and material plans needed to execute production. Understanding resource planning thoroughly is essential for passing the CPIM exam and for effective supply chain management in practice.

What Is Resource Planning?

Resource planning is the process of converting the production plan (developed during S&OP) into the aggregate resource requirements needed to fulfill that plan. It validates whether the organization has sufficient capacity — in terms of labor, equipment, facilities, materials, and capital — to meet the planned production levels. Resource planning operates at the aggregate or product family level, rather than at the individual SKU or item level.

Resource planning is sometimes referred to as Resource Requirements Planning (RRP). It is the capacity planning technique associated with the production plan level of the manufacturing planning and control hierarchy.

Why Is Resource Planning Important?

1. Validates the Production Plan: Without resource planning, a production plan may be created that is impossible to execute. Resource planning ensures feasibility by checking that adequate resources exist or can be obtained.

2. Supports Strategic Decision-Making: Resource planning helps management make long-range decisions about hiring, capital equipment purchases, facility expansion, and outsourcing — decisions that require significant lead time.

3. Prevents Costly Surprises: Identifying resource shortfalls early in the planning process allows organizations to take corrective action before problems cascade into missed deliveries, overtime costs, or lost customers.

4. Aligns Operations with Business Strategy: Resource planning ensures that operational capabilities are aligned with the demand forecast and strategic objectives agreed upon during the S&OP process.

5. Provides a Foundation for Detailed Planning: Resource planning at the aggregate level feeds into more detailed planning processes such as Rough-Cut Capacity Planning (RCCP) at the Master Production Schedule (MPS) level and Capacity Requirements Planning (CRP) at the Material Requirements Planning (MRP) level.

How Does Resource Planning Work?

Resource planning follows a structured process:

Step 1: Start with the Production Plan
The production plan specifies output levels by product family, typically stated in monthly or quarterly time buckets over a planning horizon of 12 to 24 months (or longer).

Step 2: Develop or Use a Resource Bill (Bill of Resources)
A resource bill (also called a bill of resources or resource profile) is a key tool in resource planning. It lists the critical resources required to produce one unit of a product family. These resources might include:
- Labor hours by department or skill type
- Machine hours by work center or resource group
- Material or supplier capacity
- Warehouse or storage space
- Capital or financial resources

The resource bill is typically developed by industrial engineering or operations planning and is expressed in hours per unit or units of resource per unit of output.

Step 3: Calculate Aggregate Resource Requirements
Multiply the production plan quantities by the resource bill factors to determine total resource requirements for each critical resource, for each time period.

Example:
If the production plan calls for 1,000 units of Product Family A in March, and the resource bill shows that each unit requires 2.5 labor hours in Assembly and 1.0 machine hour in Fabrication, then:
- Assembly labor needed in March = 1,000 × 2.5 = 2,500 hours
- Fabrication machine hours needed in March = 1,000 × 1.0 = 1,000 hours

Step 4: Compare Requirements to Available Capacity
The calculated resource requirements are compared against the available (or planned) capacity for each critical resource. This identifies potential overloads or underloads.

Step 5: Resolve Imbalances
If resource requirements exceed available capacity, management must decide how to resolve the gap. Options include:
- Adjusting the production plan (reduce planned output, shift production to other periods)
- Increasing capacity (overtime, additional shifts, hiring, subcontracting, capital investment)
- Improving productivity (process improvements, reducing waste)
- A combination of the above

If capacity significantly exceeds requirements, management may consider reducing workforce, selling equipment, or taking on contract work.

Step 6: Iterate Until a Feasible Plan Is Achieved
Resource planning is an iterative process. The production plan and resource plan are adjusted until a balanced, feasible, and agreed-upon plan emerges. This validated plan then becomes the basis for the Master Production Schedule.

Key Characteristics of Resource Planning

- Planning Level: Aggregate / Product Family level
- Associated Plan: Production Plan (S&OP level)
- Time Horizon: Long-range, typically 12–24+ months
- Time Buckets: Monthly or quarterly
- Key Tool: Resource Bill (Bill of Resources)
- Purpose: Validate that resources are sufficient to support the production plan
- Nature: Rough, aggregate, and top-down

Resource Planning vs. Other Capacity Planning Techniques

It is essential to understand how resource planning fits into the hierarchy of capacity planning:

Resource Requirements Planning (RRP): Validates the Production Plan at the aggregate level. Uses resource bills. Long-range horizon.

Rough-Cut Capacity Planning (RCCP): Validates the Master Production Schedule at the item or product level. Uses resource profiles or bills of labor. Medium-range horizon.

Capacity Requirements Planning (CRP): Validates MRP planned orders at the work center level. Uses detailed routing data. Short- to medium-range horizon.

Input/Output Control: Monitors actual versus planned capacity at individual work centers. Short-range, execution-level control.

Each level becomes progressively more detailed, moving from aggregate to specific.

The Role of the Resource Bill

The resource bill deserves special attention. There are two common approaches:

1. Bill of Resources: A simple listing of the total amount of each critical resource needed per unit of the product family. It does not consider when during the production process those resources are needed — it simply totals them.

2. Resource Profile: A more sophisticated version that offsets resource requirements by time period, showing when each resource is needed relative to the completion date. This accounts for lead time offsets and provides a more accurate picture of resource timing.

For resource planning at the S&OP level, the simpler bill of resources approach is often sufficient, given the aggregate and long-range nature of the planning.

Practical Considerations

- Resource planning should focus on critical or bottleneck resources — not every resource in the organization. These are the resources most likely to constrain output.
- The resource plan should be reviewed and updated regularly as part of the monthly S&OP cycle.
- Resource planning supports make-or-buy decisions and outsourcing strategies when internal capacity is insufficient.
- It is a management-level tool — it supports executive decisions, not shop floor scheduling.

Exam Tips: Answering Questions on Resource Planning

Tip 1: Know Where Resource Planning Fits in the Hierarchy
The CPIM exam frequently tests your understanding of the planning hierarchy. Remember: Resource Planning validates the Production Plan. RCCP validates the MPS. CRP validates MRP. This is one of the most commonly tested concepts.

Tip 2: Understand the Key Tool — The Resource Bill
If a question asks what tool or input is used in resource planning, the answer is the resource bill (or bill of resources). Know the difference between a resource bill and a resource profile (time-phased version).

Tip 3: Remember the Aggregate Nature
Resource planning deals with product families, not individual items. If a question describes planning at the item or work center level, that is likely RCCP or CRP, not resource planning.

Tip 4: Focus on Critical Resources
Questions may test whether you know that resource planning focuses on a limited number of critical or key resources, not every resource in the factory.

Tip 5: Know the Time Horizon
Resource planning is long-range. If a question mentions short-term or daily capacity decisions, that is likely input/output control or finite scheduling — not resource planning.

Tip 6: Understand the Iterative Nature
Resource planning is part of an iterative S&OP process. If the resource plan reveals an infeasible production plan, the production plan must be revised. The exam may present scenarios where you must identify the correct course of action when capacity is insufficient.

Tip 7: Be Able to Perform Simple Calculations
You may be asked to calculate resource requirements by multiplying planned production quantities by resource bill factors. Practice these straightforward multiplication problems to ensure accuracy and speed.

Tip 8: Distinguish Between Capacity Planning Levels
A common exam trap is presenting a scenario and asking which capacity planning technique applies. Use these cues:
- Production Plan → Resource Requirements Planning
- Master Production Schedule → Rough-Cut Capacity Planning
- MRP Planned Orders → Capacity Requirements Planning
- Shop Floor Execution → Input/Output Control

Tip 9: Link to S&OP Outcomes
Resource planning supports the S&OP objective of creating a feasible and agreed-upon plan. Questions about the purpose or outcome of S&OP may reference resource planning as the validation step for the production plan.

Tip 10: Read Questions Carefully for Scope
Pay close attention to keywords in questions: aggregate, product family, long-range, production plan, and critical resources all point toward resource planning. Keywords like work center, routing, planned orders, or shop floor point toward more detailed planning levels.

Summary

Resource planning is the aggregate capacity validation process that ensures the production plan developed during S&OP is achievable with available resources. It uses resource bills to translate planned output into resource requirements, compares those requirements against available capacity, and drives management decisions about how to close any gaps. It is a long-range, top-down planning tool that focuses on critical resources at the product family level. Mastering this concept — and clearly distinguishing it from RCCP, CRP, and input/output control — is essential for CPIM exam success.