Capacity Planning – Meaning, Classification and its Goals
February 12, 2025
It is very interesting to study how Organizations and Businesses grow, evolve, change, mature and also decline over a period of time. Organizations are very similar to living entities that respond, react and evolve in relation to the external and internal environment that surrounds them. The survival and growth is entirely dependent upon the continuous […]
After the control charts have been created and deployed, the control phase of the DMAIC methodology comes to a close as far as the project is concerned. The solution that the team had set out to reach has now been reached. It is therefore time to transition the process from being a project to being […]
Inventory management as well as Supply chain operations are often overlapping and hold the key to the success of sales operations. In all of the businesses be in automobile, manufacturing, pharma or retail industry, status of inventory reflects the health of the business. Inventory operations have two key elements namely Inventory System and Physical operations. […]
Some professions in the world are not considered to be as acceptable as others. This notion of acceptability is widely influenced by the cultural norms in the society where one is conducting business. However, in the modern world, being associated with sin does not seem to be much of a deterrent to investors. Cities like […]
What is Risk ? Having the best people execute the plan does not guarantee success. There are a host of external factors which may play a role in determining the outcome regarding whether a project has been successful or not. These are called Project risks. The formal definition of a risk is an event or […]
It is very important for an organization to have well defined objective. A well-defined objective facilitates development of strategies and policy thereby creating value for customers.
Operational strategy is essential to achieve operational goals set by organization in alignment with overall objective of the company. Operational strategy is design to achieve business effectiveness or competitive advantage.
Operational strategy is planning process which aligns the following:
In this global competitive age organization goal tend to change from time to time therefore operations strategy as a consequence has also be dynamic in nature. A regular SWOT analysis ensures that the organization is able to maintain competitive advantage and business leadership.
For success of organizational strategic objective, strategic planning has to trickle down to various function areas of the business. In order to build strategy management process a sequential process as below is followed
Competition Analysis: In this step company evaluates and studies current competition in the market and practices that are followed in the industry for operations and production vis-a-vis company policies
Goal Setting: Next step involves narrowing down the objective towards which the organization wants to move towards.
Strategy Formulation: The next step is breaking down of organizational goals into operations and production strategies.
Implementation: The final step is to convert operations and production strategies into day to day activities like production schedule, product design, quality management etc.
As organizations are always customer-centric, production and operation strategy for organization are built around them
Measurement of formulated operations and production strategy is important to maintain alignment with the organization objectives. In simple terms productivity is defined as sum of total output per employee or per day. Productivity of company is dependent on industry and environmental conditions in which it is operating.
Two essential part of productivity are labor and capital. In scenario of limited resources, optimum and efficient utilization of labor and capital will generate favorable productivity. Productivity measurement also enables company to identify areas which require improvement or special focus. Also productivity provides ready report card to measure status against company’s production objective.
Productivity measurement can be classified in three categories based on the inputs used for calculation. Partial productivity ration of output is compared to one of resource used for example, labor productivity where output is compared to the labor wages.
Total productivity measure takes into consideration sum of all input factors which are used for the output.
In the modern age technology plays an important part in productivity.
Another important factor is the case of production is wastivity. Not 100% of input would be converted to output, there is going to waste during production.
Wastivity is reciprocal of productivity. Classic examples of wastivity are defective products and services which either have to be re-cycle or disposed of completely. Other example is idle capacity of material, man-power equipment etc.
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