PRODUCTION PLANNING AND

SUPPLY CHAIN MANAGEMENT

 PRODUCTION PLANNING AND OPERATIONS
MANAGEMENT

Transformation Range of inputs

Products or services Requisite quality

level
Production Management Operation Management

• Set interrelated management • Set interrelated management

activities, which are involved activities, which are involved
in manufacturing certain in manufacturing certain
products products and is extended to
services management.
 SUPPLY CHAIN MANAGEMENT
• It is the management of a network of interconnected
business involved in the provision of product and
service packages required by the end customers in a
supply chain.
 STRATEGY ANALYSIS CONCEPTS

• Starting point of the operations and production

planning.
• It consists of the “advance work” that must be
done in order to effectively formulate and
implement strategies.
 ORGANIZATION
• it is an entity, such as an institution or an association
that has a collective goal and is linked to an external
environment.

A. Analyzing Organization Goals and Objectives

B. Analyzing the External Environment
C. Assessing the Internal Environment
 ANALYZING ORGANIZATIONAL GOALS AND
OBJECTIVES
• Organizations must have clearly articulated goals and objectives in order to
channel the efforts of individual throughout the organization toward
common ends.
• Goals and objectives also provide a means of allocating resources
effectively.
• A firm’s vision, mission, and strategic objectives form a hierarchy of goals
that range from broad statements of intent and bases for competitive
advantage to specific, measurable strategic objectives.
 ANALYZING THE EXTERNAL
ENVIRONMENT

• Managers must monitor and scan the environment as well

as analyze competitors.
2 frameworks of the external environment
I. The general environment consists of several elements, such as
demographic, technological, and economic segments, form which key
trends and events can have a dramatic impact on the firm.

II.The industry environment consists of competitors and other

organizations that may threaten the success of a firm’s products and
services.
 ASSESSING THE INTERNAL
ENVIRONMENT

• It helps to identify both strengths and

weaknesses that can, in part determine how
well a firm will succeed in an industry
 SETTING STRATEGIC DIRECTION

• We need to look at where we want business to be in the future.

This allows us to work backwards by selecting future
targets, developing strategies to achieve those targets and
then communicating the direction the business is taking to
team.
helps us to set timeframes within which we need to achieve
goals and will allow us to budget for future expenses related
to the innovation process.
 ACTION PLAN TO IMPROVE
PRODUCTIVITY
• Internal Business Processes: Implement an annual program of reviewing
business processes throughout the department.
• The programs objectives are:
 Business process initiative
 Improved development plan review process

• Processes Action Teams: Promote internal cooperation and collaborative

problem solving through temporary, multi-discipline teams formed to solve
a problem or improve production systems, processes.
 PROGRAM PROJECTS AND
MANAGEMENT
• Develop business process to manage department’s various
funding programs and projects management to ensure efficient
resource utilization and on-time schedule accomplishment.
Establish a program review board
Bid Process: pre-con meeting
 BENCHMARKING PROGRAMS
• Learn from “Best in Class” organizations that perform similar
functions and processes. Vigorously evaluate on how
department performs a process and then evaluate and contrast
how the organization we are comparing performs the function.
Street sweeping benchmarking
 SITUATIONAL ANALYSIS
• It is the process of identifying and
evaluating all relevant factors
connected with a particular situation.
• It minimizes financial losses, boost
marketing efforts, and generally make
it possible to achieve and even exceed
the expectations for a project.
THE BROAD CLASSES OF CAPACITY
PLANNING:
• Lead capacity strategy – adding capacity
in anticipation of an increase in demand
aggressive strategy with the goal of luring
customers away from the company’s
competitors.
• Lag strategy – refers to adding capacity
only after the company is running at full
capacity or beyond due to increase in
demand
• Match strategy – (also known as the
tracking strategy) adding capacity in small
amounts in response to changing demand
in the market
 STRATEGIC, TACTICAL, AND
CAPACITY PLANNING

• Strategic Planning- organization’s process of defining its

strategy, or direction, and in making decisions on allocating its
resources to pursue this strategy

Strategic planning Tactics

Involves business thinkers Specific actions we take in

determining why, and in a global implementing our strategy
sense what, we will achieve in
stated goals
 STRATEGY PLANNING PROCESS

• when doing strategic planning, we need to determine

what outcome we want to achieve and how we will
measure the reports
• we need to craft an aggressive action plan to take
advantage of opportunities discovered during
research
 TACTICAL PLANNING PROCESS

• we need to understand and decipher the strategic

goals; then identify the courses of action we will need
to achieve those strategic objectives
• tactical planning is needed so they can know what to
do, when they need to do it, and how they will do it
 AGGREGATE PLANNING

• involves developing, analyzing, and maintaining the operational

schedule of an organization
• organizes areas of business that include targeted sales
forecasts, production levels, inventory levels and customer
backlogs
 AGGREGATE PLANNING IN MANUFACTURING

• involves allocating the correct amount of resources for every

manufacturing process so that time and cost are minimized
• works well because of the ability to produce, hold and sell
inventories at any given time
 AGGREGATE PLANNING IN SERVICE

• services are considered perishable,

where any capacity that is unused is
considered to be wasted
 CAPACITY

• ability of a given system to produce

output within the specific time
 CAPACITY PLANNING

• essential in determining optimum

utilization of resources and plays an
important role in decision making process
 STRATEGIC CAPACITY PLANNING

• utilized for capital intensive resources like plant,

machinery, labor, etc.
• helps the organization in meeting the future
requirements of the organization
 CLASSIFICATIONS OF CAPACITY PLANNING

• 1. Long term capacity

• 2. Medium term capacity
• 3. Short term capacity
 GOAL OF CAPACITY PLANNING

• To meet the current and future level of the

requirement at a minimal wastage.
SUPPLY CHAIN MANAGEMENT: CONCEPTS AND
NEED

• Supply chain- Is the collection of steps that a company takes to transform

raw components into final products and deliver them to customers.
• Supply Chain Management (SCM) – is the process that is used by a
company to ensure that its supply chain is efficient and cost effective.
• FIVE STAGES: a. planning; b. development; c. manufacturing; d. logistics; e.
returns.
 SUPPLY CHAIN MANAGEMENT (SCM)
1. Whiplash or bullwhip effect
2. Supply chain technology
3. Production

a. Inventory
b. Location
c. Transportation
d. Information
 BENEFITS OF SUPPLY CHAIN MANAGEMENT

a. Improved Business Performance

b. Improved System Capability
c. Improved Supply Chain Effectiveness
d. Improved Channel Management and Communication
e. Supply Chain Integration
f. Supply Chain Information Sharing and Visibility
g. Improved supply Chain Partnerships
h. Improved Productivity
 ELEMENTS OF SCM

1. Sales and Operational Planning

2. Collaborative Planning, Fulfillment and Replenishment
3. Concurrent Engineering
4. Extended ERP
5. Integrated Supply Planning
a. Supplier Rationalization
b. Vendor Managed Inventory
c. Consignment Process
 LOGISTICS

• Involves the integration of information, transportation,

inventory, warehousing, material handling, and packaging, and
often security.
• Contains the integrated planning, control, realization and
monitoring of all internal and network-wide material, part and
product flow including the necessary information in industrial
and trading
 MAIN LOGISTICS TARGETS

• The main targets of logistics can be divided into performance

related and cost related. They are high due date reliability,
short delivery times, low inventory level and high capacity
utilization.
 LOGISTICS VIEWPOINTS

1. Inbound Logistics
2. Outbound Logistics
 LOGISTICS FIELDS

1) Procurement Logistics
2) Production Logistics
3) Distribution Logistics
4) Disposal Logistics
 LOGISTICS OUTSOURCING

• involves a relationship between a company and an LSP which,

has more customized offerings, encompasses a broad number
of service activities, and characterizes by a long-term
orientation
 THIRD-PARTY LOGISTICS

• Involves using external organizations to execute logistics

activities that have traditionally been performed within an
organization itself
• It includes any form of outsourcing of logistics activities
previously performed in-house.
 FOURTH-PARTY LOGISTICS

• is an integrator that assembles the resources, capabilities and

technology of its own organization and other organizations to
design, build, and run comprehensive supply chain solutions
 EMERGENCY LOGISTICS

• is a term used by the logistics, supply chain and manufacturing

industries to denote specific time critical modes of transport
used to move goods or objects rapidly in the event of an
emergency
 ELECTRONIC DATA INTERCHANGEABLE(EDI)
• The electronic transfer of a
standardized business transaction
between a sender and receiver
computer, over some kind of private
network or value added network
(VAN).
• Developed to integrate information
across larger parts of an organization’s
value chain.
ADVANTAGES:
1. The option of storing and manipulating data
electronically without the cost of manual entry.
2. Reduced errors due to eliminating the need to rekey
documents on the destination side.
3. Increased speed in which trading partner receives
and incorporates the information into their systems
thus greatly reducing cycle times.
4. Alternative to/replacement of information flow that
requires high levels of human interaction and material
resources
5. Direct and easy communication of structured business
information, on agreed standards, between parties.
6. Faster delivery due to faster information flow.
 E-COMMERCE

• Electronic Commerce is sharing of business

information, maintaining business relationships
and conducting business transactions by means
of telecommunications network.
 IMPACT OF E-COMMERCE TO SCM

• Cost Efficiency
• By using E-commerce, companies can reduce costs, improve data accuracy,
streamline business processes, accelerate business cycles, and enhance
customer service.

• Changes in the distribution

• Customer Orientation
 IMPACT OF E-COMMERCE TO COMPANIES

• Shipment Tracking
• Shipping Notice
• Freight Auditing
• Shipping Documentations and Labeling
• Online Shipping Inquiry
 REQUIREMENTS FOR SUPPLY CHAIN
MANAGEMENT
1. Challenge of Managing Global Supply Chains
2. Outsourcing Creates Supply Chain Visibility Challenges
3. Going beyond Supply Chain Visibility to Rapid Responses
4. High Value Solutions for Supply Chain Management
 CHALLENGE OF MANAGING GLOBAL SUPPLY
CHAINS

• In today’s environment, supply chain plans become obsolete as soon as they

are complete because the dynamics of the market and the consumer are
changing so quickly.
• There is an essential requirement to monitor and manage change:
understanding opportunity, analyzing the impact and conducting rapid risk
trade-off and response.
OUTSOURCING CREATES SUPPLY CHAIN VISIBILITY
CHALLENGES

• Extended supply networks create substantial obstacles in

terms of supply chain visibility and coordination.
• Manufacturers must not only build win-win relationships with
their supply network partners but must also increasingly
collaborate with major customers.
GOING BEYOND SUPPLY CHAIN VISIBILITY TO RAPID
RESPONSES

• Active coordination is the only way to achieve

today’s heavily outsourced environment.
• Responsiveness requires global visibility and
coordination.
 HIGH VALUE SOLUTIONS FOR SUPPLY CHAIN
MANAGEMENT

• ESSENTIAL CHARACTERISTICS:
1.Breadth
2.Depth
3.Integration
4.Collaboration
 I.T. SERVICES

• Key challenges in IT:

 Has many masters and activities are constantly being reprioritized.
 The length of the “Path to Business Value” for IT can be quite long.
 IT is a captive service organization with all of the inherent risks.
 Outsourced IT service struggle to deliver adequate response capabilities when
non-standard issues arise.

 Note that Operations Performance are more important as ever.

 SCM TOOLS MEET SOFTWARE AS SERVICE

• A Supply Chain Management on-demand

service can allow a company to achieve the
rich capabilities it requires in a medium that
simplifies adoption by reducing
implementation risks, ownership costs, and
required IT resources.
 ON-DEMAND SERVICE PROVIDERS OPTIMIZE
VALUE FROM THE DATA CENTER
• On-demand service providers find a way to deliver results instead of
excuses.
• OPTIMAL CONDITIONS FOR SUCCESS:
 High availability data centers
 Tight physical security
 Redundancy, providing n+1 reliability by design
 World-wide connectivity, through careful selection of high performance ISP
 Purpose specific networks that
 Server hardware that can be benchmarked and tuned for a single purpose,
delivering maximum value
 Applications that are designed with a special purpose operational environment
in mind thereby maximizing its potential
 HIGH VALUE SOLUTIONS + IMPROVEMENT
DRIVEN SERVICES = REAL VALUE
• Manufacturing organizations need high value computing products to deal
with supply chain management challenges.
• High value, leading edge supply chain computing products make great on-
demand offerings because:
• On-demand vendors can tune their solution and the operating environment to
provide unparalleled performance and service.
• Long lasting value is assured
 STEPS TO OPTIMIZING SUPPLY CHAIN
MANAGEMENT
• When deciding what system model to implement, management must
consider and understand the structure type of its supply chain. The four
structure types are pipeline, late customization, diverging, and converging.
• There are 2 major players in supply chains namely contingent workers and
raw materials suppliers.
 STEPS TO OPTIMIZING SUPPLY CHAIN
MANAGEMENT
1. Write it down 7. Improve efficiency
2. Improve collaboration 8. Material sourcing
3. Secure a long term relationship 9. Accurate forecasting
4. Consider our needs and the needs 10. Product delivery and storage
of contractors
5. Create a lasting and sustainable
list of suppliers we can rely on
6. Ensure ideal product level