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Non-capital analysis:technical and operational aspect
Nur Aini Masruroh
http://aini.staff.ugm.ac.id/ ; Email: [email protected]; [email protected]
Overview Product design Production process Capacity planning Location Human resources Environmental aspect Legal aspect
Product selection Three successful business trend exist:
Specializing in offering one type of product Example: Starbucks, Subway
Megastore that allow one-stop shopping for a large variety of product Example: Wall-Mart, Carrefour
Megastore that specialize in one product area Example: Home depot (household megastore), office max
These trends have also emerged on the internet where some sites have been successful in offering a large variety of different products while others specialize in single offering Example: www.BlueDenimShirt.com
Product design Factors to be considered: Function Reliability Maintainability Produceability Human factors Safety Disposeability
Production process :Tests of Feasibility Operational Feasibility
How well will the solution work in the organization?
Technical Feasibility How practical is the technical solution? How available are technical resources and
expertise?
Operational Feasibility Questions to Ask
Is the problem worth solving? will the solution to the problem work? How do end users and management feel about the
solution? Has a usability analysis been conducted?
Technical Feasibility Questions to Ask
Is the proposed solution practical? Do we possess the necessary technology? Do we possess the necessary technical expertise? Is the schedule reasonable?
Production process: Factors to be considered Dependability Quality and specification of the product Economic Scope: the ability to process several products Equipments: related to the technology used,
budget Raw material required Process flexibility Maintenance and replacement Spare-parts availability External factors, i.e. regulation on environment,
labor, etc
Capacity planning Capacity planning is done to overcome the
demand fluctuation Related to: human resources, machines, and
other physical equipment Factors to be considered (economical
aspects): Demand (market) Availability of raw material and supplies Standard production capacity (technology
constraints) Break event point (BEP) and shut down point
(SDP)
Demand Three possibilities:
Capacity lead demand Demand lead capacity Equal demand and capacity
For highly fluctuate demand, the capacity is predicted based on its highest estimated value
The availability of raw material and supplies Raw material and supplies are possible to
become constraints, such as: Mineral industry: limited to availability of mineral Import raw material: limited import quota
If raw material and or supplies become constraints, the predicted market cannot be the only consideration in capacity planning
Technology limitation Some technology may have certain capacity
constraints (requirement) Cement industries require minimum capacity 300
ton/day Steel industry (blast furnace process): 2 millions
ton/year/unit
This limitation is changing as the technology is changing
Location Location of the plant can be:
Raw material oriented Close to the raw material resources Transportation cost of raw material is higher than finished
product or raw material is easily damage Example: mining company, milk, etc
Market oriented Close to customers Transportation cost and warehouse consideration, quality of
the finished product Example: ice cream, soft drink, bakery, etc If the consumers concentrated at a certain location, the
distribution of finished goods is expensive, and high advertisement cost, choose location close to the consumers
Location Factors to be considered;
Production factors: raw material Power supply Human resources area condition capital infrastructure
Product: transportation material handling distributor
Environmental: Market Acceptance of the local community Competitor Legal aspect
Production factors: raw material Factors to be considered:
Availability Continuity Quality Transportation Suppliers
Human resources Factors to be considered in recruitment:
Skill Age Gender Educational background Health Personality Other added values
Organization Function based
Grouped based on the function Suitable for stable condition
Product based Grouped based on the product Each group has its own organizational structure Suitable for big organization with many products or
plants
Hybrid Combined function based and product based
Function based organization Example
Director
R & D Production Finance Marketing
Product based organization
Product B
R&DProduc
tion Finan
ce Market
ing
Director
Product C
R&DProduc
tion Finan
ce Market
ing
Product A
R&DProduc
tion Finan
ce Market
ing
Example
Hybrid structureHead office
Product B
Production Purchasing Marketing
Product A
Production Purchasing Marketing
Administration Finance HRD R&D
Example
Matrix structure
Legal aspects The proposed business should be NOT
included in the Daftar Negatif Investasi (DNI) Clearly stated whether it will be in the form of
PT, CV, Firma (Fa) For small business, it should follow regional
regulation
Environmental aspect Waste management ISO 14000 Environmental is a sensitive issue Concern on environmental issues increases