Operations Management – The Nature Of Planning And Control (1) Notes

The Nature of Planning and Control

WHAT IS PLANNING AND CONTROL

• Planning and control is concerned with the reconciliation between what the market requires and what the operations resources can deliver.

• Planning and control activities provide the systems, procedures and decisions which bring different aspects of supply and demand together.

• The purpose is to make a connection between supply and demand that will ensure the operations processes run effectively and efficiently and produce products and services as required by customers.

The Difference Between Planning and Control

• Planning is a formulisation of what is intended to happen at some time in the future. But a plan does not guarantee that an event will actually happen. Rather it is a statement of intention.

• Although plans are based on expectations, during their implementation things do not always happen as expected. Customers change their minds about what they want and when they want it. Suppliers may not always deliver on time, machines may fail or staff may be absent.

• Control is the process of coping with changes in these variables. It may mean that plans need to be redrawn in the short term. It may also mean that intervention will need to be made in the operation to bring it back on track.

• Control makes the adjustments which allow the operation to achieve the objectives that the plan has set even when the assumption on which the plan was based do not hold true.

• The nature of planning and control activities changes overtime.

• Long term

  • In the very long term, operations managers make plans concerning what they intend to do, what resources they need and what objectives they hope to achieve.

  • The emphasis is on planning rather than control, as there is little to control as such.

  • They will use forecasts of likely demands which are described in aggregated terms.

  • Operation managers will be concerned mainly to achieve financial targets. Budgets will be put in place which identifies its costs and revenue targets.

• Medium term

  • Looks ahead to assess the overall demand which the operations must meet in a partially disaggregated manner.

  • Contingencies will have been put in place which allow for slight deviations from the plan.

  • These contingencies will act as a reserve resource and make planning and control easier in the short term.

• Short term

  • Many of the resources will have been set and it is difficult to make large changes.

  • Short term interventions are possible if things are not going to plan.

  • Demand will be assessed pm a totally disaggregated basis.

  • In making short term interventions operations managers will be attempting to balance the quality, speed, dependability, flexibility and costs of their operation on an ad hoc basis.

  • It is unlikely they will have time to carry out detailed calculations on the effects of their short term planning and control decisions on all these objectives but a general understanding of priorities will form the background to their decisions making.

The Volume Variety Effect on Planning and Control

• Operations which produce a high variety of products and services in relatively low volume will clearly have customers that require a different set of factors and use processes which have a different set of needs from those operations which create standardised products or services in high volume.

SUPPLY AND DEMAND AFFEC PLANNING AND CONTROL

• The nature of the decisions taken to plan and control an operation will depend on both the nature of demand and the nature of supply in that operation.

Uncertainty in Supply and Demand

• Uncertainty makes both planning and control more difficult.

• A combination of uncertainty in the operations ability o supply and in the demand for its products and services is particularly difficult to plan and control.

Dependant and Independent Demand

• Some operations can predict demand with more certainty than others.

• Dependant demand is demand which is relatively predictable because it is dependent on some factor which is known.

• Dependant demand planning and control concentrates on the consequences of the demand within the operation.

• Materials requirement planning is one such dependant demand approach.

• Some operations are subject to independent demand.

• They will supply demand without having any firm forward visibility of customer orders.

• Independent demand makes best guesses concerning future demand, attempts to put the resources in place to satisfy this demand and attempts to respond quickly if actual demand does not match forecast.

• Inventory planning and control is a typical of independent demand planning and control.

Responding to Demand

• Dependant and independent demand concepts are closely related to how the operation chooses to respond to demand.

• In conditions of dependent demand an operation will only start the process of producing goods and services when it needs to.

• The planning and control necessary for this kind of operation can be called resource to order planning and control.

• Other operations might be sufficiently confident of the nature of demand, if not its volume and timing, to keep in stock most of the resources it requires to satisfy customers.

• These operations would need create to order or make to order planning and control.

• Some operations produce goods or services ahead of any firm orders to stock.

• Operations of this type will require make to stock planning and control.

P:D Ratios

• Another way of characterising the graduation between resource to order planning and control and make to stock planning and control is by using the P:D ratio.

• This contrast the total length of time customers have to wait between asking for the product or service and receiving it (Demand time, D) and the total throughput time (P).

• Throughput time is how long the operation takes to obtain the resources, and produce and deliver the product or service.

• Make to stock operations produce their products and services in advance of any demand. For this type of operation the demand time...

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