Operations planning is an important part of any business. Effective and efficient management of operations is the hallmark of a successful company. Operations management is an old concept, but as many of the techniques of operations management have gained attention in the business media, the definition has become somewhat unclear, making effective management of operations seem more complicated than it really is.
Operations management, also called “operations planning” or “operations scheduling,” is a term assigned to the planning of production in all aspects, from workforce activities to product delivery. While this type of planning is almost exclusively seen in manufacturing environments, many of the techniques are used by service-oriented businesses. Simple to implement, operations management can be applied using nothing more than a spreadsheet program.
Operations management is primarily concerned with the efficient use of resources. While it is sometimes referred to as production planning and employs many of the same techniques, the primary distinguishing characteristic is that production planning is narrowly focused on the actual production whereas operations management looks at the operation as a whole.
Aspects of operations management
Operations management has a broad focus: inventory levels must be managed, materials ordered/stored, capacity maximized, relationships with suppliers maintained, and the interactions within the system monitored.
Many methods satisfy these items of focus; however, there are some generalities involved in their processes. Each involve the observation of the current state, analysis of the costs associated, the establishment of performance goals, and the monitoring of efforts toward those goals.
Primary concerns are capacity planning and production management.
Static vs. dynamic scheduling
There are two main types of operation scheduling: static and dynamic. Static scheduling carries an assumption that all steps in a process can be defined and will not change. Dynamic scheduling assumes that steps in the process will change so nothing is scheduled until the demand is received. Dynamic scheduling works well in environments where there is a high degree of customization.
An example of a static plan would be a retail clothing company. In this case, production levels are determined up to one year in advance. An example of a dynamic plan would be a floral shop. In these cases, while there may be a few arrangements for display and possible purchase, the primary focus is on creation of arrangements after an order is received.
Capacity planning is focused on maximizing the capacity of a company to make it more efficient and more profitable. Capacity planning at its most basic attempts to match the volume the company is able to produce to the demand to avoid downtime by preventing bottlenecks.
Aggregate planning is a static form of production planning. It focuses on satisfying expected demand. This may be in relation to production, the workforce itself or inventory management. Aggregate planning basically ties facility planning in with scheduling decisions and it does so quantitatively, meaning it produces numbers to back up an operations plan. Aggregate plans help match supply and demand while minimizing costs by applying upper-level forecasts to lower-level, production-floor scheduling. Plans generally either “chase” demand, adjusting the workforce accordingly, or are “level," meaning that labor is relatively constant with fluctuations in demand being met by inventories and back orders.