Operational planning

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Operational Planning

What is operational planning,what does this means ?

Operational planning is the process of planning strategic goals and objectives to tactical goals and objectives-

in fact, manager's task is to co-ordinate and organize the resources of the organisation in the most efficient way to provide the best value for the organization's stakeholders

this coordination task is complex and therefore the manager need to create a formal document called Operation plan-

Operation plan is a plan for the implementation of strategies contained within the strategic plan and involved an for day to day management of the organization

What is the purpose of Operation plan?

provide organization's personnel clear pictures of

their tasks and responsibilities

goals and objectives contain in the strategic plan

it is a management tool that facilitates

co-ordination of the organization's resource{human,physical,financial}

So that goals and objectives in the strategic plan can be achieved

What contain an operation plan

clear objective of them

activities to be delivered

quality standard

desired outcomes

staffing and resource requirement

implementation timetables

a process of monitoring progress

1.1 Operations planning

operations planning deals with taking decisions about methods of production,process innovation,location and scale of operation

Importance and the need for planning

production decision cannot be made independently of the rest of the business- if an operation manager are to announce

One day that his department would "increase output by 50% over the next six months"

Without coordinating,this with other departments will face some of problems that is

Not enough capital to pay for stocks,machines and labor: {no one has told the finance department}

Too few workers:{The HR has not been asked to add this output increase into the workforce plan}

Nor enough customers:{what's the point of increasing output unless there is good evidence from the marketing department that the extra products can be sold profitably?[considered to be most important one]

1.2 operations decision

operations decision are decision made to manage day to day business- e.g refilling water cooler or fulfilling customer's orders

types of operations decision include:

Pricing:

Customers about bargaining about the price

The manager give the price level or given margin which are to be maintained and hence decision can be made by employees

Discounts:

managers should have all informations on current discount level on the market

and what discount to be given to dealers

in short channel level of operation have to managed properly{ channels sales/network marketing

Promotions:

operations decision include:

How to promote the product

which best areas will give best ROI after promotion

getting promotional materials ready

Ensuring that promotion are done properly in the market

collecting information

Lots of operation information that needs to be summarize by manager which will be accessed by the director of the organisation

Other operational decisions made in day to day activities include:

maintaining inventory

logistics decision

sales and outreached

employee management

customer management

Factors influencing the operation decisions:

The decisions taken by operations managers can have a significant impact on the success of business-these decisions are often influenced by :

marketing factors

availability of resources

technology

Marketing Factors :

The link with marketing:

key informations needed by operation managers when planning future production level is the estimated or forecast demand -

This is crucial link: trying to match SUPPLY TO POTENTIAL DEMAND:This process is known as sales and operations planning

Sales and Operations planning: preparing input resources to supply product to meet expected demand

if sales forecast confirmed to be accurately,the operation managers should be able to :

match output closely to the demand level- this may require the holding of inventories

Keep inventory levels to a minimum efficient levels

reduce wastage of production,e.g by perishable products being rejected due to being too old

employ and keep busy a stable ,appropriate number of staff

produce the right product mix i.e range of products that are forecast to be demanded

marketing :

through market research a business gains information to inform the following decisions:

IDEAS AND RESEARCH AND DEVELOPMENT

Discovery and developing ideas that meet customer's needs

PRODUCTION METHODS

showing what customers will pay and what quality is required-this will inform production methods and the labor/capital balance

LOCATION

Deciding on location in relation to consumer buying patterns and costs contraint

Availability of resources

the production of all goods and services requires resources and availability of these resources or lack of them can influence a number of important operational decision:-

location

a business might locate in acountry or region that has an abundant supply of necessry raw materials

nature of production method

if supply of suitable employees is good/wage costs is low means that labor intensity is higher

Automation

if costs of automation/robotic computer controlled equipment is falling then businesses can change production methods

availability of resources at an appropriate costs include

The presence of an R&D department will enhance generation and development of ideas

Access to suitable land,labor and capital may be a constraint on production and locations decisions

Availability of technology

cheap digital technology has made possible the application of IT throughout an operation department-technology is vital in operations decisions especially IT Based system.Example:-

IT Systems

reduce labor and payroll costs

make quality consistent

reduce stock

allow more efficient production planning

new materials enable different products

Advance communication system

this have enabled any businesses to locate most anywhere

Computer aided design{CAD}

CAD:the use of computer programs to create two or three dimensional graphical representations of physical object (2D/3D)

can specialized for specific application

in architecture design

used in product and industrial design:

CAD are used mainly for creation of 3D models in details

CAD are used throughout engineering process from design of products through analysis of component assemblies to the structure manufacturing methods

this allow the engineer to both interactively and automatically analyze design variation :to find best design for manufacturing while minimizing the use of costly physical version

BENEFITS OF COMPUTER AIDED DESIGN{CAD}:

Lower product development costs

increased productivity

improve product quality

faster time to market

good visualization of final product and its constituent parts

great accuracy so error are reduced

easy to re-use of design data for other products applications

LIMITATION OF COMPUTER AIDED DESIGN{CAD}:

Complexity of programs

need for extensive employee training

large amount of computer processing power required and this can be expensive

{4} computer aided manufacturing {CAM}

CAM: the use of computer software to control machines tools and related machinery in the manufacturing of component or complete products

Through the use of CAM, a factory can be highly automated

a high degree of precision and consistency can be achieved only together with people and machinery

CAM system seeks to control production process through automation

Benefits of CAM:

precise manufacturing and reduced quality problems compared to production methods controlled by people

faster production and increase labour productivity

more flexibility production allowing quick change over from one product to another

integrating with CAD

CAM allow more designs variant of product which means that niche products can be produced as well as mass market product

THIS customisation increase competitiveness in both market segment

Limitation of CAM

costs of hardware,programs and employee training

these costs means that small firms cannot access

hardware failure

breakdown is complex and time consuming

quality assurance is still needed

Errors in program can produce fault which need to be rectified

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Flexibility and innovation

flexibility is the ability of a production system to adapt to a changing market

This involve that future demand patterns are not easy to predict accurately so there is a need for "operational flexibility"

Operation flexibility:the ability of a business to vary both the level of production and the range of products following changes in customer demand-this flexibility can be achieved by :

increasing capacity by extending buildings and buying more equipment{expensive option}

hold high stock but these can be demanded d there is an opportunity cost to the capital tied up

have a flexible and adaptable labor force

USING temporary,part time contracts reduces fixed salary cost but does not reduce worker motivation

have flexible flowline production equipment>Mass Customization

The need for flexibility in volume ,delivery time and specification

Volume flexibility : ability to operate efficiently , effectively and profitably over a range of output :this in short run can be :

able to meet a sudden change in orders either increase or decrease

still supply quality at the price the customers requires

Delivery time:

in the long run help of being prepared for varying demand at different stages of the product life cycle

flexibility in just-in-time production method enable to able to deliver at a time that suits customer as it secure a sale

specification:increasing demand products at differ slightly from each other

Ability to provide a range of specification to order may be vital

this is the essentials ways in which businesses can look to make their operations and their workforce more flexible:

4 ways you can the business more flexible:

remote working

Through technological advancement made increasing in the use of remote working

different roles bring particular demand on individuals

all businesses stand to benefits from giving the member of the organisation the change of functioning normal

Deploying new solutions

new software solution and cloud-based business applications can be crucial in giving the business the best chance to be flexible and efficient

Flexible hours

flexible working affects employee morales and staff retention

this makes flexible hours an integral part of how service providers deliver what theirs customers want without disruption

cash flow options

cash flow ensure financial flexibility can be the difference between a company remaining operational

being aware of a number of emergence financial options can often be essential in keeping during times of acute pressure on cash flows and income streams

ADVANTAGE of flexibility in an organization

Enhance competitiveness

improved efficiency

better team building

better continuity during uncertainty

your environmental impact will reduce

hiring cost and turnover cost are reduced

faster growth of the organization

invention versus innovation

invention:formulation of new ideas for products or processes

innovation:practical application of new inventions into marketable product and services

Protecting an invention=patent:

to be protected by patent, the invention must be

NEW

an innovative step that is not obvious to other people knowledge of the subject

capable of industrial application that is it can be made and used

not be excluded{certain inventions does not count e.g scientific theories}

Innovation

innovation is about putting new idea or approach into action- innovation are commonly described as the "the commercially successful exploitation of ideas"-

Successful innovation is mainly about creating or added value: it does so either by:

improving the existing goods,processes or services{process innovation}

changes in the equipment and technology used in manufacturing

including the software used in product design and development

improvement in the tools , techniques and software solutions used to help in supply chain and delivery system

changes in the tools used to sell and maintain your good

changes in the method used for accounting or customer service

Developing goods,processes or service of value that have not existed previously{product innovation}This take in various forms such as:

The development of new products

an improvement of the performance of existing product

a new feature to an existing product

This require :

Major drivers is technological advancement

changes in the customer requirement or outdated product design

lead to greater demand

However both kind of innovation require the business to :

challenge the status quo in a market

have a deep understanding of customers need

develop imaginative and novel solution to how those needs might be met

innovation can come in different forms:

improving or replacing business processes to increase efficiency and productivity,or to enable the business to extend the range or quality of existing products or services

Developing entirely new and improved products and services-often to meet rapidly to changing customer or consumer demand or needs

adding value to existing products,services or markets to differentiate the business from its competitors and increase the perceived value to the customers or markets

whatever the form is, innovative is a creative process-the ideas may come from:

Inside the business- from employees,in house designers ,sales staff

outside the business- suppliers , customers , media reports , market research insights

-successful innovation come from filtering those ideas,identifying those that the business will focus on and applying resources to exploit them

>most important factor in determining competitive of business

Benefits of innovation :

improved productivity and reduce costs

a lot of process innovation is about reducing unit costs - this might achieved by

improving the production capacity

OR flexibility of the business

to enable to exploit economies of scale

better quality

better quality products and services are more likely to meet customers needs

higher sales and profits

Building a product range

a business with limited product range or single product would almost benefit innovation

a broader product range provides an opportunity for:

higher sales and profits

reduce the risks for shareholders

To handle legal and environment issues

innovation enable the business to reduce its carbon emissions,produce less waste or perhaps to follow with changing product legislation

changes in laws often force business to innovate even if they don't want

more added value

effective innovation is a great way to establish a unique selling proposition{USP} for a product

something which the customer is prepared to pay more for

and which helps a business to differentiate itself from competitors

improved staff retention,motivation and easier recruitment

innovative businesses have a reputation for being inspiring place in which to work

potentially good quality recruits are drawn from

Risks of innovation

a strategy in investing in R&D and innovation can bring significant rewards but it is not without risks:

Competitions

"an innovation only confers a competitive advantage if competitors are not able to replicate it in their own businesses"

while patent provide some legal protection

it is hard -to protect innovative products and processes

ONE RESEARCH ACCESS~invest and take risk ~

Uncertain commercial return

much research is speculative and no guarantee of future profit or revenue

THE longer the development timescale the greater the risk that research is undertaken by competitors

availability of finance

R&D has to compete for scarce cash

given the risk involve , R&D involve a high required rate of return

firm that has limited cash resources=high opportunity costs of investing in R&D

There are types of innovations and includes:

product innovation

launching new or improved product(or services)on the market

advantages include:

higher prices and profitability

added value

opportunity to build early customer loyalty

enhanced reputation as an innovative company

public relations e.g news coverage

increased market share

process innovation

finding better or more efficient ways to producing existing products or delivery of existing services

advantages include:

reduce costs

improved quality

more responsive customer service

greater flexibility

higher profits

Process innovation

Process innovation:involve the use of a new or much improved production method or service delivery method

some recent examples to show the extent and importance of these new methods:+

robots in manufacturing

faster machines to manufacture microchips for computers

computer tracking inventories for example by using bar codes and scanner, to reduce the chances of customers finding businesses out of stock

using the internet to track the exact location of parcels being delivered worldwide and improve the speed of delivery

Examples:

Amazon is testing unmanned flying drones to deliver parcels to customers to improve the workflow and the speed of delivery-According to the CEO,Jeff Besoz the drones,to be called the OCTOCOPTERS, could deliver parcels weighing up to 2.3 kg to customer within minutes the placing of an order

Process innovation enables to :

-lower total and average costs

matches products to customer's need more exactly

motivated employees

this makes it cheaper production method making the business more competitive

sometimes innovation involve patents of new techniques these could be sold or licensed to other businesses

however, process innovation requires planning and management for change-

innovation can be one of the most important factors that determines the competitiveness of a business.

product innovation can create new market opportunities

process innovation can transform the efficiency of a manufacturing system

innovation if successful can aid to create added value

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Production methods

several methods may be used at different stages of overall production process and these include

Job production:producing unique or small scale products one at a time by skilled workers

one-off or small number of items produced

normally made to customers specifically

often undertake by small specialist business

with job production,the complete task is handled by a single worker or a group of workers-jobs can be low technology/small scale as well as high technology/complex

low technology jobs

here the organisation of production is extremely simply with required skills and equipments easily obtainable

this methods enable the customers specific requirement to be included often as job progresses

hairdressers

high technology jobs

high technology jobs involve much greater complexity ad therefore present greater management challedge

the important ingredient in high technology job production is project management or project control-Essential features of a good project control for a job are:

clear definition of objectives-how should the job progresses(stages)

decision making process-how are decisions taking about the needs of each process in the job,labor and other resources

film production

Essential requirement: Highly skilled workforce

Benefits of job production:

customer's requirement and changes can be handled

associate with higher quality

employees can be better motivated-more job satisfaction

a flexible production method{=meet exactly need}

often undertake specialist project often with high value added

Drawbacks of job production:

individual cost of one unit may be high

often labor intensive=-high labor cost{slow}

requires close consultation with clients

usually reliant on high skills

wide range of tools and equipments

Batch production:production in stages where several the same item are put together at the same time-each batch goes through one stage of the production process before moving into the next stages