Chapter 6 - Operating Plan

8/13/2019 Chapter 6 - Operating Plan

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Chapter 6: The Operating Plan

Tour 128Entrepreneurship

and

Business Planning


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A. LocationB. Facilities, Lay-out and Design

C. Equipment and Supplies

D. SourcingE. Production and Service Procedures

1. Production and Service Flow Chart

2. Standard Operating Procedures

F. Inventory Management and Control

G. Quality Control and Customer Service

H. Maintenance


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Operating Plan

Describes the physical necessities of your

business operation, such as your business

location, facilities and equipment.

It may also include information about

inventory requirements and suppliers, and a

description of the manufacturing process.


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It also describes how you will structure your

company and how you will actually carry out

everything you present elsewhere in your

business plan.


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H. Maintenance


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Location provide the complete addresswhere your business is located. Describe the

surrounding area and explain how this

location can be effective.


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If there are any disadvantages or possibleproblems presented by your location note itright away. Indicate what you have done to

counteract these negatives.

State whether you own or will lease the

property. Provide the terms of mortgage orlease. Present your monthly payment, lengthof term.


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Chapter 6: The Operating Plan Provide details of the square footage of the

property, If you have more than one location

be sure to describe each one. Note whether

you will outgrow the space and how will you

plan to handle a move/expansion.


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H. Maintenance


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Facilities defined as the workspace neededto carry out the operations of the

organization. It is a space in which a business's

activities take place

Lay-out and Design - after choosing a location

for your business the next stage in operationsplanning is to design the best physical lay-out

for the facility.


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The available space needs to be assessed withworkstations, equipment, storage and otheramenities needs to be arranged.

The aim is to allow for the most efficientworkflow without disruption. A business thathas carefully arranged its layout will allow for

a more effective and efficient workflow andproduce its good or services to a highstandard.


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The Physical Plant What type of premises are they and what is the

size and location?

If it's applicable, include drawings of the building,copies of lease agreements, and/or recent real

estate appraisals.

You need to show how much the land or buildings

required for your business operations are worth,and tell why they're important to your proposed

business.


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Describe your principal location. What are the

main uses of each site (training, conference,

administration, storage, etc).

Are you using all available space productively?

Do you have room to expand your operations

if needed?


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CRITERIA IN DETERMINING LAY-OUT ANDDESIGN:

A. Ease of Expansion or Change - Facilities

should be designed so that they can be easily

expanded or adjusted to meet changing

production needs. Any design should beflexible.


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B. Flow of Movement - The facility design

should reflect a recognition of the importance

of smooth process flow.

C. Space Utilization - This aspect of facility

design includes everything from making sure

that every possible space has an important

use.


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D. Ease of Communication and Support- Facilitiesshould be laid out so that communication within

various areas of the business and interactions with

vendors and customers can be done in an easy and

effective manner.

E. Impact on Employee Morale and Job Satisfaction -

Some ways layout design can increase morale areobvious, such as providing for light-colored walls,

windows, space.


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F. Promotional value - If the business commonlyreceives visitors in the form of customers,vendors, investors, etc., you may want to make

sure that the facility layout is an attractive onethat improves the company's reputation.

G. Safety - The facility layout should enable the

business to effectively operate in accordance withOccupational Safety and Health Administrationguidelines and other legal restrictions.


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H. Maintenance


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EquipmentWhat kind of equipment will

I need? (this will depend on the nature of

your business)

Example: Office Equipment will include:

Computers, Printers, Fax Machine,

Telephones, Internet Connection,Photocopier, etc.


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Besides describing the equipment necessary

and how much of it you need, you also need

to include its worth and cost, and explain any

financing arrangements.

List your current plant and equipment

purchases. These can include vehicles,

computer equipment, phones and fax

machines.


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For each item include a description of the plant

or equipment (make and model if applicable),

purchase date, purchase price and running costs.

If you have not purchased all of your equipment

yet, you can include a separate table and include

an expected purchase date.


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Suppliers - Explain who your suppliers are and

their prices, terms, and conditions. Describe

what alternative arrangements you have made

or will make if these suppliers let you down.

List your main suppliers and detail what they

supply to your business. Also explain how youwill maintain a good relationship with them.


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H. Maintenance


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H. Maintenance


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How will your production process work?

This section lays out the details of your

businessday to day operations.

Create an outline which includes hours ofoperation, days that the business will be open,

will it be seasonal?


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H. Maintenance


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Flow Chart a step by step map of your

operations process. They help identify

inefficiencies and determine operating and

production costs, skills and labor required foreach stage of the process.


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Map the process make a flow diagram depicting each stage of operations.

The flow chart must answer the following

questions: What are the different stages?

Who is responsible for each stage of operations?

How does work get transferred from one stage toanother?

Is any part of your operations outsourced?


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Map the productions steps, it must respond to

the same questions above.

If your processes vary dramatically among

products, draw a map for each product.


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A. Location

B. Facilities, Lay-out and Design


D. Sourcing

E. Production and Service Procedures





H. Maintenance


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Standard Operating Procedures describe how

a company conducts business.

Your SOP should document how quality

management systems and technical activities

function.


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It typically define the procedures necessary to

maintain and use production systems so that

product output conforms to industry

standards.

Using these procedures, your staff can

complete job tasks reliably, consistently andsafely.


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STEP 1 Identify the SOPs needed by your organization.

For example, create a list of SOPs required to

provide instructions on, operation, archiving and

support.

Identify who needs to contribute to generating

the SOPs and who needs to approve the

documents.

Set up a review process, and document when and

how revisions occur. SOPs should be evaluated on

a regular basis, such as every two years.


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STEP 2 Create a title page for each procedure. List the

complete title. Each procedure should have a

descriptive title and number.

For example, label procedures related to

personnel with the letters HR for Human

Resources. Write a short summary describing the

purpose of the procedure and any other relatedprocedures.

List the necessary equipment and general safety

instructions.


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STEP 3

Create pages containing detailed instructions.

Include the SOP number and specify the category

on each page as well. At the bottom of each page,include the current page number and the total

number of pages in the document.


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Accounting Practices may include directives

for managing accounting documents, property

tax assessments, legal expenses and

confidentiality agreements. The handling anddocumentation of expenses for travel and

entertainment may also be included, as well

as bank account reconciliations and policieson credit cards and wire transfers.


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Financial Procedures includes information

about financial reporting. Directives for annual

stockholder meetings, board of director

meetings and the release of financialdocuments related to forecasting, reporting

and analysis may be included. If the business

raises capital through asset acquisition, bankloans, leasing or stock options, the procedures

for these activities need to be delineated.


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Computer and IT Procedures include

information about computer and information

technology processes, such as company policy

about Internet use, email, software andhardware evaluation, training plans and

troubleshooting. SOP may also reflect

standards for assessing the risk of technologysecurity breach and a recommendation to

conduct technology security audits.


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Human Resources Procedures include

guidelines for candidate interviews and

background checks, as well as job descriptions

and policies for application processes.Compensation and benefits may be described,

with directives for employee health insurance,

retirement security benefits and payrollpolicies.


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Sales and Marketing it is recommended that

businesses incorporate sales and marketing

guidelines into SOP, including guidelines for

market research and procedures for actionssuch as direct-mail marketing, advertising,

Internet marketing and public relations.


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Security include measures for maintaining

safety and security may be a component of

SOP, as well as statements about ethics,

guidelines for the employee conduct code andsteps to take during emergencies, such as a

fire or natural disaster.


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List your current inventory items. For eachitem include:

a brief description of the inventory item (includingmake/model, name or reference number)

unit price

quantity you have in stock total cost or value of the inventory item (Calculate

unit price multiplied by quantity).


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Explain how you will keep track of your inventory.

An Inventory Strategy is a day-to-day

methodology to follow for ordering, maintainingand processing items in your business.

Inventory is one of the largest capitalinvestments every business makes.


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Quality Control is the key to productstandardization and repeat patronage.

It simply means that you are able to provide

consistent products and services to yourcustomers.

Consistency is an important product attribute

for retaining customers because it gives themcomfort of knowing exactly what they will get

with every purchase.


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A Quality Assurance Plan includes an

organizational structure, details on each

employees responsibilities and qualifications

needed to fulfill those responsibilities.

Another requirement is that the materials

used for production must meet thespecifications for manufacturing a product of

a desired quality.


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Your quality plan must also specify the

standards of the prospective suppliers must

meet before a contract (ISO certified, etc).

It also implements feedback through

investigation of customer complaints and

correction of non-compliance issues.


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Customer Service is important for every

business. Convincing customers that they will

receive professional customer service from

you is a major challenge.

Rendering excellent service can be achieved

by having clear policies and procedures,professional staff and solid systems.


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Customer service revolves around thefollowing:

Efficient order fulfillment and processing

Ability to track and maintain accurate information

Politeness and attitude of employees

Maintenance and repair policies

Ease of payment Reliability of service (do you do what you say you

are going to do?)


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Quality Assurance means developing

operational controls to ensure that the results

match the desired outcomes.

Customer Service Operations are designed to

keep customers satisfied while protecting the

organization.


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A. Location

B. Facilities, Lay-out and Design


D. Sourcing

E. Production and Service Procedures





H. Maintenance


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Documents

Chapter 6 - Operating Plan