1.16 Planning and Control
A plan will detail the expected outputs during a specific time and there are long-term (5–10 years, aggregate capacity plan), medium-term (2–5 years, making resources available to meet long-term plan, resources are mostly inflexible), short-term (1–2 years, priorities need changing due to unexpected things)
Operations planning = acquire and manage resources needed for the future
Operations control = implementing plans and adjusting work to achieve plan
Organisational strategy, influenced by marketing and financial strategy, influences the operations but is not under its control. Resource and demand planning influence operations planning -> operations scheduling -> operations control (planning to control).
Planning is very important, especially in big organisations, because a bad plan will lead to higher costs due to too high stocks, poor customer service,…Plans make implications of decisions visible (marketing says higher stock and finance says less cost) and a schedule makes implications of actions clear (e.g. filling beds in a hospital)
The main planning and control responsibilities are managing capacity which means:
\- understanding and measure your capacity to output
\- understand and measure the demand
\- try to match those two
In capacity measurement it is important to measure the right thing.
Once you have found the level of capacity needed you will need to find out where to put your facilities which is where the economies of scale come in. These work, until a set amount when the complexity of the operation will be too high and the cost will rise again. You will also take into account your closeness to your markets, transportation of your goods, resources and more.
Forecasting demand involves looking at you environment (PEST, STEEP) and the product life-cycle needs to be taken into account (Introduction, take-off, slow-down, maturity, decline; book 16, page 11).
Then you need to match capacity and demand both long-term but also now which will see a lot of fluctuations. There are several strategies:
\- Level capacity: keeping it constant despite fluctuations, might be maximum level like emergency service; for manufacturing its ok to store often time
\- Chase demand: adjusting to meet demand; e.g. tourist attraction hiring more people in the summer
\- Demand management: change demand to match capacity (sometimes possible): e.g. by varying the price; reservation of capacity by clients; complementary goods
The next important thing is scheduling, which is about matching the flow of inputs with the outputs in the short term.
1\. Production scheduling can be both push and pull scheduling. Push would focus on the output target and adapt everything else to achieve that, which might lead to high stocks of components if you have a problem along the line. Pull is the basis for the Japanese just-in-time concept, which means that if no input is needed then the previous step will not create an output. This might put everything to halt at problems but you have little unsold stock.
2\. Managing the customer order cycle involves thinking about what can be done before an order by a customer:
\- Resource-to-order: resources bought at order, e.g. catering or major projects like a dam
\- Make-to-order: no work done until order received; e.g. customer bikes
\- Make-to-stock: everything is done beforehand; e.g. stereo system, pre made sandwiches
3\. Queuing is used with service operations as the product cannot be produced in advance, which results in creating a “stock” of customers waiting to be served. With this you need to think about:
\- What capacity level do I need for adequate service?
\- Queue management for least negative impact on customer satisfaction
\- How to physically manage the queue
E.g. one queue/ two cashiers or two cashiers splitting up task.
Other option: entertain, ads, productive use (forms at a doctor)
Sequencing is about assigning priorities: first come, first served; shortest processing time; customer priority; easiest due date