Production operation strategy

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    PRODUCTION/OPERATION STRATEGY

    y Policies and Objectives:Management --------- requires to take decisions.Decision should be taken logically not arbitrarily.Decision makers require to know:

    1. The objective or mission of the organization, that is the purpose for which the undertaking is in being.

    2. The policies of the organization, that is the means whereby the missionor objectives are to be achieved.

    In the absence of such knowledge the decisions can only be takencapriciously.

    y * A short term decision may determine some long-term action which isundesirable but inescapable.

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    y PO M ------- not a self-contained or self sufficientbody.

    y

    It depends upon integration with rest of the system.y Government legislation may force to make a changewhich requires a service modification. In turn thiscan alter processes in such a way thatoperators/workers are displaced with consequentredundancy and retaining problems.

    y PO M manager should look outside the four walls of his unit ------------------- the problems foreseen andrectified.

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    y The PO M strategy must try to link the policy decisions associated withproduction and/or operations to the market place, the environment inwhich the organization operates and the overall objectives of theorganization.

    y The successful manager must plan, execute and control operationswithin the framework of the corporate plan.

    y Indeed, unless the production/operations plan is part of the corporateplan, the total enterprise can only be a failure or at best a partial

    success.y From the corporate policy of the organization, through its links into the

    market place, The PO M function then must drive a PO M Strategy.y These activities must be linked in a two way flow of information and

    decision making.

    Corporate policy

    PO M strategy

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    Strategies, Guides and Unitiesy PO

    M ---- a part of the whole organization.y O rganization can succeed only by carrying on active transactionswith their environment, and any production/operations unit standswithin two identifiable, but not independent environments --- thecommunity at large and the parent corporation.

    y These interdependences produce two important consequences of high practical value:

    1. Changes in the environment impose changes in the

    organization.2. Changes within the organization affect the environment.*O rganizations must be prepared to respond to change.*No decision is eternal.

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    F IVE GUIDES:1. Where multiple objectives exist, it is unwise to try to satisfy

    them all simultaneously.A public swimming pool can be designed to satisfy atleast three objectives:

    a) To allow divers to practice;

    b) To enable serious swimmers to swim;c) To let fun swimmers enjoy themselves.*An operation manager may identify a number of possible

    objectives:

    I. Maximum customer satisfaction;II. Minimum cash flow;III. Minimum scrap and/or rework;IV. Minimum inventory;V. Maximum resource utilization;VI. Maximum employ satisfaction.

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    2. The greater the diversity the greater the difficulty.y Diversity must not be restricted at all costs, but the costs of

    diversity must be realized when taking the just one moredecision.

    3. P roblems become easier if broken into parts.y Some problems when first viewed seem to vast to be dealt

    with.y Breaking the problem up can result in solving the parts

    which can be resolved, and hence displaying the rest in aform which indicates how they may be dealt with.

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    4 . O rganizations should be kept as small as the market and thetechnology permit.

    y Age of changey Larger organization -------- slower its response to change5. O rganization structures should serve the needs of the

    customer.y Enterprises must create that which satisfies the consumer.

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    THREE UNITIES :1. Unity of market position:

    Whatever the technology, an attempt to satisfy twosignificantly different market positions is often doomed tofailure.

    2. Unity of volume:To attempt to produce high and low volume through thesame resources can result in considerable organizationaldifficulties.

    3. Unity of complexity:Simple products or services cannot readily be produced inorganizations designed to make complex ones --- theinfrastructure of the organization will impose enormous

    burdens.

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    Forecasting

    Forecasting is the prediction of future events on thebasis of

    Historical DataO pinionsTrendsKnown Future Variables

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    PURPO SE O F F OR ECASTy To prepare sales and other budgetsy To plan productiony To plan investment in production capacityy To determine resource requirementy To provide basis for business planning;y To establish targetsy To plan promotional strategyy To provide basis for decision making

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    y Marketing opportunity analysis is at theheart of marketing and this requires

    accurate sales forecast

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    Types of forecasts

    Two basic forecasts:

    1. The long-term market forecast

    (5 years and more)2. The short-term market forecast

    (1 budgetary year)

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    The long-term market forecast:y P roduction/operations manager has little

    responsibility for it.y It should be carried out by marketing peoplebacked by economic, statistical, political andtechnical advisers, and will be based upon

    information on such matters as:i) Levels of activity, both national and international;

    ii) Government expenditure;

    iii) Availability of human and other resources;iv) P ossible changes in price structures;v) variations in living standards;

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    vi) competition, both national and international;vii) P ossible new products and/or services;

    viii) Market potential;ix) Technological changes;x) R esources of the organization;

    xi) History of the organization;xii) long-term objectives, policies and plans of the

    organization.

    * Long-term forecast is particularly necessary whenconsiderable expansion is required and when heavy

    capital expenditure is contemplated.

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    THE SHORT-TERM SALES F ORECASTy P rediction covering the next budget period, usually 12 months, of:1. The products/services to be sold, defined in as much detail as

    possible;2. The prices which the market can bear;3. The quantity } of each product or service4 . The quality } ----- do ------5. The reliability } ------ do ------6. The required delivery dates/timings.And will be in agreement with the general policy of the organization.

    y Items for stock y Customers design, or y A company offering a service rather than a product

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    y P roduct or service groups ----- defining a group aswork offered having a stable and similar cost

    patterny The short-term forecast will then detail:a) The product/service groups offered;

    b) The volume of business measured financially to bederived from each group;

    c) The distribution of this business throughout the

    year.

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    The procedure for setting up a forecast:1. A target figure for profit and/or volume for the

    forthcoming year

    2. The market people ------- set a tentative forecast, which issubmitted to the operating and finance people.3. The feasibility of meeting the tentative forecast, having

    regard to the appropriate facilities available and obtainable.4 . The finance people will examine the emended forecast to

    see if it will satisfactorily meet the companys policy onearning and investment.

    5. With the comments of the operations and finance peopleavailable, marketing will produce another forecast which

    again is scrutinized.6. Acceptable to all concerned.7. The final forecast is then submitted to the top management

    for approval.

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    Strengths? Weaknesses? Opportunities? Threats?

    P roduct

    P lant

    P rocesses

    P rogrammes

    P eople

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    y Consider a proposal to use a computer for production controlin place of an existing manual system.

    y In this discussion only some of the cells are highlighted:P lant Opportunities? An effective computer system

    offers the chance of significantly increasingutilization of resources.

    Processes Strengths? All processes are well-definedfor purpose of a quality system.Programmes Weaknesses? The present method of

    production control will not easily transfer to acomputerized system.

    People Threats? The existing staff believe that acomputerized system will result in the loss of jobs

    and a reduction in a status for those remaining.

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    DECISION MAKINGy Programmable decisionsy

    Non-programmable decisionsProgrammable decisions are repetitive and routine, so that afixed procedure can be set down to solve them.Non-programmable decisions are moved, unstructured, andare often associated with people, their resolution dependingupon the decision-makers judgment, knowledge andexperience.

    y Clearly, the more problems which can be formulated so thattheir decisions can be programmed, the more time will beavailable for dealing with the non-programmable problems

    which are frequently the most important.

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    Areas of activity1. Materials management

    2. Methods and procedures3. Timetabling4 . P reparation of estimates

    5. Quality management6. Safety procedures7. Maintenance policies8. P ayment policies