DECIDE WHAT YOU NEED TO IMPROVE IN ORDER TO ACHIEVE OPERATIONAL OBJECTIVES
Look at operational objectives for the year
Increase productivity
Reduce waste
Improve product quality
Review past performance and recent changes in the market:
Sales report
Production log book
Customer feedback
Market analysis
What specific activities does the business need to undertake to achieve these objectives?
Staff training
Regular inventory checks
Office renovation
Replacement of old equipment
Promotional campaigns
DETERMINE YOUR MONTHLY PRODUCTION SCHEDULE
Assess sales forecast
For each month, work out a specific monthly production quantity that will ensure your business always has products/services available to meet customer demand while meeting operational objectives
For products, either
Match production rate to demand rate in sales forecast or
Maintain a constant production rate and keep a stock of finished goods for high demand months
To determine which approach is better, for each option. translate production schedule into required capacity:
Staff resources
Equipment
Storage space
Estimate production capacity based on past experience but remember that the improvements you have decided to make may also impact productivity and efficiency
Staff may become more effective
New production process may reduce downtime
Consider the business’ constraints with regard to its current production capacity and the costs involved in each option
Decide on a monthly production schedule that utilizes capacity efficiently
If current capacity can’t meet forecasted sales, consider:
Outsourcing
Increasing capacity
Reducing sales
For services, plan ahead to meet customer demand
DEVELOP A COST PLAN
Estimate monthly production costs
Cost of producing 1 unit or service – material costs, labor costs (use past records but consider impact of improvements)
Multiply by production quantity
Estimate overhead
Add overhead expenses – sales, advertising, rent, utilities, insurance and licenses (use past records and adjust for next year