Translating Business Plans to Labor and Production Output Plans

Numerous meetings are held as part of the labor and production planning process to make important choices for the medium term. These sessions' principal objective is to get departments to agree on a strategy for achieving the best possible supply-demand balance. This planning makes the idea of aligning the operational plan with the business plan emerge (Jacob & Chase, 2014).
Aggregate operations planning entails converting corporate plans into comprehensive plans for labor and output for a short-term (6 to 18 months). This translation process is crucial because it results in the operational translation of long-term strategy plans. This planning focuses on the broader view of an organization’s operations and work on tailoring the product demand with organization’s ability of supplying products in a cost-efficient manner.

Labor and production output planning is executed on three levels: Long-range, Medium-range and Short-range. Long-range planning is done annually, which is focused on multi-year horizon. Medium-range planning is for covering 6 to 18 months in future while Short-range is for one to six days. This planning helps organization to produce master plan that generates production amount and schedule in short-run. It further leads to the mapping of rough-cut capacity, which provides verification of the possibility of scheduled production under the given constraints of capacity, labor, equipment, materials and facilities. This component of production and labor plan enables material planning. Final assembly in which operations are highlighted that put the product in finished form follows it. The production plan focuses on the manufacturing activities of scheduling and shop floor controlling (Chase et al., 2010).

The planning varies from organization to organization because it involves various factors and strategies. The strategies included in labor planning encompasses stable workforce for variable working hours and for working at a constant rate. Furthermore, the strategies included in production planning embraces expenses associated to basic production such as, costs linked with change in rate of production, costs of inventory holdings, and costs of backordering (Jacobs & Chase, 2014).

Process of Translating Business Plans to Labor and Production Output Plans

The process of how business plan is translated into the plans of labor and production plan includes the following stages (Jacobs & Chase, 2013).

Forecasting and Demand Management for Sales and Operations Planning

The first stage is of intermediate term activity planning based on determining the expected demand and demand management, followed by planning of sales and operations to meet the demand requirements. Sales are the inputs needed for salesforce activities. Operations are the inputs for manufacturing, service planning and logistics. Demand management are the inputs of master scheduling and material planning to generate schedule for production process.

Process Planning

The second stage is of long term activity planning based on designing manufacturing process and logistic activities. It determines the procedure and technology required for producing product/service. It further plans capacity and logistic capabilities.

Scheduling of Production and Shipping

The third stage is of short term activity planning based on scheduling production and shipping orders in future. This planning is required for adequate customer service.

Benefits of Translating Business Plans to Labor and Production Output Plans

Following are the benefits of translating business plan into production output and labor plans (Chase et al., 2010):

It helps an organization providing better customer service.

It shorten the customer lead-time by stabilizing production rate and lowering inventory.

This process coordinate different business activities (warehouse distribution, direct sales, retail sales, etc.) with the service and manufacturing division of organization that are responsible for meeting the customer demand over time.

It helps organization in maintaining equilibrium demand and supply and keep it at equilibrium point over time.

It builds team working among departments of operations, finance, marketing, logistics, distribution and sales.

It motivates managers to keep a check on the total capacity, as demand is uncertain. Managers monitor the expected needs for next 3 to 18 months.

The production plan highlighted in business or corporate plan helps managers to design the production accordingly as some managers may subcontract a specific production portion.

The operations managers submit quarterly or annual budget requests to receive funding for production as business plan highlights operational and production cost required to balance demand and supply and to make profit.

Aggregate operations plan bridges the gap between capacity planning and strategic planning in the border context of production level, quantity of inventory, and size of workforce.

Yield management discussed in business plan maximizes revenue and make the demand of product more predictable which is significant to aggregate planning by allocating right capacity to the right customer on right time at right price.

Conclusion

Aggregate operations planning involves translating business plan into broader labor and production output plan. This translation leads to intermediate and long term planning of operations. The main objective of this planning is to meet balanced demand and supply. For this reason, operations plan must kept in line with the business plan. It follows a systematic process, starting with forecasting and demand management of sales and operations inputs. This stage is followed by process planning and scheduling of production and shipping. Nowadays, organizations are executing aggregate operations panning because of its immense benefits. These benefits include, better customer service, shorten lead-time, balanced demand and supply, alignment between capacity and strategic planning, yield management, teamwork, and continuous monitoring of all business activities.





References

Chase, R.B., Shankar, R., Jacobs, F.R, & Aquilano, N.J. (2010). Operations and Supply Chain Management (12th ed.). New York, NY: McGraw-Hill.

Jacobs, F.R., & Chase, R.B. (2014). Operations and Supply Chain Management: The Core (3rd ed.). New York, NY: McGraw-Hill.

Jacobs, F.R., & Chase, R.B. (2014). Operations and Supply Chain Management (14th ed.). New York, NY: McGraw-Hill.





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