OVERVIEW OF OPERATIONS

PLANNING & CONTROL

 Operations planning is concerned with the
determination, acquisition and arrangement of all
facilities necessary for the future operations.

 whereas Operations control is concerned with the

implementation of a predetermined operations plan
or policy and the control of all aspects of
operations according to such a plan or policy. It is
also called ‘Production Planning and Control (PPC)’
in manufacturing sector.
 OPC or PPC can be defined as the process of
planning the production in advance, setting the
exact route of each item, fixing the starting and
finishing date for each item,
 Giving production orders to shop and lastly
following up the progress of products according to
orders. It is also called the ‘nerve center’ of the
factory.
PLANNING PROCESS

LONG RANGE PLANS – OVER ONE YEAR

- R&D, NPD, CAPITAL INVST
TOP

INTERMEDIATE RANGE PLANS,

3 TO 18 MONTHS
OPERATION - SALES , PRODUCTION
MANAGER PLANNING
SHORT RANGE PLANS
MANAGER, UPTO 3 MONTHS
SUPERVISOR, JOB ASSIGNMENT.
FOREMEN ORDERING, SCHEDULING
Typical activities in the planning and control process
include:
 setting objectives-so that you know what is to be
achieved by your plans and by when
 allocating tasks and responsibilities-who is to be

involved with the new product and service and how

they are to be involved
 scheduling-work patterns, process scheduling,
supply and demand scheduling
 assessing resource requirements-people and their
skills, money (budgets), time, raw materials, plant
and equipment, capacity
 monitoring and evaluating performance-the control
part, involving control activities, measures and
control techniques.
 In the pond- draining approach to production
planning and control, the emphasis is on holding
reservoirs of materials to support production...this
approach operates with little information passing
through the chain of the production system, from
customers to production to suppliers
 With a push-based supply chain, products are
pushed through the channel, from the production
side up to the retailer. The manufacturer sets
production at a level in accord with historical
ordering patterns from retailers. It takes longer for
a push-based supply chain to respond to changes in
demand, which can result in overstocking or
bottlenecks and delays (the bullwhip effect),
 n a pull-based supply chain, procurement,
production and distribution are demand-driven
rather than to forecast. However, a pull strategy
does not always require make-to-
order production. Toyota Motors Manufacturing is
frequently used as an example of pull production,
yet do not typically produce to order.
 They follow the "supermarket model" where limited
inventory is kept on hand and is replenished as it is
consumed. In Toyota's case, Kanban cards are used
to signal the need to replenish inventory.
 Aggregate planning is a marketing activity that
does an aggregate plan for the production process,
in advance of 6 to 18 months, to give an idea
to management as to what quantity of materials
and other resources are to be procured and when,
so that the total cost of operations of the
organization is kept to the minimum over that period
 The combination of internal and external factors
that influence a company's operating situation.

 The business environment can include factors such as:

clients and suppliers; its competition and owners;
improvements in technology; laws and government
activities; and market, social and economic trends.
Latest Trends In Business Environment

 Trends in the business and economic environment occur

in many areas.
 Today’s workforce is more diverse than ever, with
increasing numbers of minorities and older workers.
Competition has intensified.
 Technology has accelerated the pace of work and the
ease with which we communicate.
 Let’s look at how companies are meeting the challenges
of a changing workforce, the growing demand for
energy, and how companies are meeting competitive
challenges.
 Changing Workforce Demographics

 Global Energy Demands - As standards of living

improve worldwide, the demand for energy
continues to rise. Emerging economies such as China
and India need energy to grow. For example, in
recent years, China and India were responsible for
more than half of the growth in oil products
consumption worldwide
 Meeting Competitive Challenges - Relationship
management includes both supply chain
management, which builds strong bonds with
suppliers, and relationship marketing, which focuses
on customers. In general, the longer a customer stays
with a company, the more that customer is worth.
 strategic alliances (also called strategic
partnerships). The trend toward forming these
cooperative agreements between business firms is
accelerating rapidly, particularly among high-tech
firms. These companies have realized that strategic
partnerships are more than just important—they are
critical.
 Ethics Activity -

 Sustainability

 Competitive Advantage
CHALLENGES
 Competitive advantage is the favorable position an
organization seeks in order to be more profitable
than its rivals.
 To gain and maintain a competitive advantage, an
organization must be able to demonstrate a
greater comparative or differential value than its
competitors and convey that information to its
desired target market.
 For example, if a company advertises a product for
a price that's lower than a similar product from a
competitor, that company is likely to have a
competitive advantage.
 The same is true if the advertised product costs
more, but offers unique features that customers are
willing to pay for.
 Porter suggested four "generic" business strategies
that could be adopted in order to gain competitive
advantage. The strategies relate to the extent to
which the scope of a business' activities are narrow
versus broad and the extent to which a business
seeks to differentiate its products.
 Cost leadership
 With this strategy, the objective is to become
the lowest-cost producer in the industry. The
traditional method to achieve this objective is to
produce on a large scale which enables the business
to exploit economies of scale.
 Differentiation focus
 In the differentiation focus strategy, a business aims
to differentiate within just one or a small number
of target market segments. The special customer
needs of the segment mean that there are
opportunities to provide products that are clearly
different from competitors who may be targeting a
broader group of customers.
 Differentiation leadership
 With differentiation leadership, the business targets
much larger markets and aims to achieve
competitive advantage across the whole of an
industry.
Hierarchy of Production Planning
 For any manufacturing firm, theory suggests that the
firm is better off if the manufacturing planning and
control (MPC) system supports the market strategy
as well as the manufacturing strategy.
 Typically, the strongest link between market
requirements and manufacturing strategy concerns
the process choice, i.e. choosing a manufacturing
process that supports a firm's competitive priorities.
McDonald’s Supply Chain
Management is The Secret to Their
Success!
 Some Quick Facts
 McDonalds began its franchise operations in the
1950’s and has grown exponentially every year
since. Today there are McDonalds fast food
restaurants in over 100 countries! Just about
everywhere you travel there will be a McDonalds
serving up their burgers and other fare. This
company has over 69 million customers around
the world.
 Over 14000 McDonalds in the US
 Over 37,000 McDonalds globally
 They buy over 2 billion eggs annually just in the US.
 They sell 75 hamburgers every minute of everyday
around the world
 There are 550 million Big Macs sold each year
 9 million pounds of French fries are sold everyday
 60 million people have downloaded the McDonalds
App
 In 2016 They Held the Number Two Spot for Best
Supply Chain
 In 2016 McDonalds supply chain system was ranked
number 2 in the Top Supply Chains by Gartners.
One of the key reasons for McDonalds
successful supply chain is their vested interest
model. It is a model where suppliers receive larger
pieces of the proverbial pie by doing business with
McDonalds.
 McDonalds philosophy is based on The Three-
Legged Stool approach designed by McDonalds
founder Ray Kroc.
 The First Leg of the stool is McDonalds employees, the
second leg is the franchise owners and the third leg
are the trusted suppliers. Each “leg” is a partner in
success and equally important. If one leg fails, the
stool collapses. For one member of this trinity to
prosper they all must prosper.
 Capacity Planning is the process in which
organizations or teams match available employee
hours against the needs of a project or program.
 More specifically, “capacity” is the maximum
amount of work that can be completed in a given
period. (This is often measured in hours available to
be worked by employees.) And in this context,
“planning” is the act of scheduling employee hours
against a fixed or expected amount of work.
 If your company has 10 employees who each work
40 hours per week, then the company has 400
hours of weekly capacity. Without factoring in
overtime, this company could handle a maximum of
400 hours of business each week.
 Let’s stick with the 400 hours example. If your business
has 400 hours of available employee time but only 200
hours to perform, then your team is at 50% capacity.
Conversely, if there are 800 hours of work to perform,
then your team is at 200% capacity. Generally
speaking, neither of these scenarios is ideal. Low-
capacity teams have idle time on their hands, which is
particularly troubling for agencies, consultant
 Teams that are over capacity must contend with long
and difficult hours, while management is often forced to
hire expensive contractors, pay employee overtime, or
deliver lower quality work to the client.
Strategic Capacity Planning

 There are three principle methods to approach

capacity planning. Each method is based on
reacting to or planning for market fluctuations and
changing levels of demand.
 These capacity planning strategies (models) are
Match, Lag, and Lead.
 Match
 Matching is a strategy that involves monitoring the
market for demand increases and decreases on a
regular basis. Capacity is then changed to match
demand.
 Matching capacity is considered to be a moderate
strategy that requires near-constant, incremental
adjustments. It can require a considerable amount
of work, but it is a low-risk strategy that is ideal for
many organizations.
 Lag
 As its name suggest, the lag strategy involves
waiting until there is true demand before adding
additional capacity. This is the most conservative
strategy, as hiring is only initiated when demand is
at 100%. This method virtually ensures the lowest
possible staffing costs but can lead to the loss of
potential customers, if there is not enough talent on
hand to deliver products or services.
 Lead
 Lead capacity planning is the most radical of the capacity
planning strategies, as it involves changing capacity in
anticipation of market demand. Hiring can be a slow
process, and lead capacity planning allows organizations to
be prepared for growing or rapidly evolving markets.
 When demand increases, businesses that successfully
deploy lead capacity planning will be ready to meet client
needs. Granted, incorrect or off base assumptions by
management can result in overstaffed teams and have a
significant negative impact on the bottom line.
Manufacturing Layout
 In manufacturing, facility layout consists of
configuring the plant site with lines, buildings, major
facilities, work areas, aisles, and other pertinent
features such as department boundaries. While
facility layout for services may be similar to that for
manufacturing, it also may be somewhat different—
as is the case with offices, retailers, and
warehouses.
Objective of MRP
Overview of MRP
 Flow line manufacturing

 Flow line manufacturing is used to manufacture high

volumes of products with high production rates and low
costs.
 Separate dedicated flow line is created for each
product.
 Dedicated machines are used to manufacture the
products at high production rates.
 Flow line manufacturing is used in such industries where
raw materials are fed at one end and finished products
are produced continuously at the other end.
 Thus flow line manufacturing is utilized in mass
production industries.
Different Manufacturing Scenarios
 1.Discrete Manufacturing

2.Repetitive Manufacturing

3.Process Manufacturing
Discrete Manufacturing
 Discrete manufacturing is an industry term for the
manufacturing of finished products that are distinct
items capable of being easily counted, touched or
seen. Discrete manufacturing involves parts and
systems like nuts and bolts, brackets, wires,
assemblies and individual products.
Process Manufacturing

 Process manufacturing is the production of goods

by combining supplies, ingredients or raw
substances using a formula or recipe. Examples of
process manufacturing goods include food,
beverages, refined oil, gasoline, pharmaceuticals,
chemicals and plastics.
 The goods are produced in bulk quantities, and the
production usually requires thermal or chemical
conversion, such as with heat, time or pressure.
Repetitive Manufacturing
 Repetitive manufacturing (REM) is
the production of goods in rapid succession.
 Goods that are created through repetitive
manufacturing follow the
same production sequences.
 Repetitive manufacturing often goes hand-in-hand
with automated assembly processes.
MPS
Planning Horizon
 The planning horizon is the amount of time
an organization will look into the future when
preparing a strategic plan. Many commercial
companies use a five-year planning horizon,
however a general Planning horizon is around one
year.
 In manufacturing, a planning horizon is a future time
period during which departments that support
production will plan production work and determine
material requirements.
 Demand Time Fence (DTF):
 This is also known as Minimum Zone or Frozen zone.
MPS can not be changed in this period as materials
are committed to specific orders and these orders
are frozen inside the fence. It provides stable
targets for manufacturing to hit.
HEDGING IN MPS
 Hedging is a master scheduling tactic which allows
variations in the level of uncertainty and cost
commitments over time to be taken into
consideration in ordering decisions.
 It results in 'pipeline safety stocks' rather than
finished goods safety stocks. Because of the value
added structure of most firms, pipeline safety stocks
require a lower investment in inventory than the
latter approach.
 Finished goods safety stocks have been historically
viewed as the most appropriate method of
protecting against uncertainties in demand when
immediate delivery is important. Most of the theory
that supports this usage of the safety stock strategy
focuses on the uncertainty in demand over the entire
lead time required to produce or procure a finished
produc
 A powerful alternative to finished goods safety
stocks however, is the utilization of a 'pipeline'
safety stock strategy which exploits the dependent
demand relationships between final products and
intermediate stages in the production procurement
cycle.
 This strategy can be employed when the master
schedule of finished goods output is manipulated by
hedging on estimates of future output
TYPES OF SCHEDULING
Difference Between MRP and MRP2

 The original MRP was an early computer-based

method of increasing productivity. The system relied
on capturing specific sets of data and analyzing
them.
 Since the adoption of the original MRP, businesses
have become capable of capturing much more
data and analyzing it to a more-refined degree
than they could in the past, which is how MRP II
came about.
 The difference between MRP and MRP II is that the
original MRP was highly focused on short-term
manufacturing capacity. Data was analyzed, and
the scheduling of production centered on customer
orders.