OPERATIONAL PLAN

BUSINESS PLAN

1. THE OPERATIONAL PLAN MUHAMMED NOWFAL S S4 MBA

2. Agenda understand the concept of operations function in business understand the topics that are included in an operations plan 10-06-2015 2 MUHAMMED NOWFAL MSN INSTITUTE OF MANAGEMENT

3. Operations One of an important function in a business organization Managing operations is crucial Operations management can be defined as the process of marshalling business input to transform them into output in the form of product or services 10-06-2015 3 MUHAMMED NOWFAL MSN INSTITUTE OF MANAGEMENT

4. Components in an operations system The components of an operations system that is involved in the transformation of business input into output comprises of the following: Business Input Transformation Process Output Feedback External Environment 10-06-2015 MUHAMMED NOWFAL MSN INSTITUTE OF MANAGEMENT 4

5. OPERATION SYSTEM 10-06-2015 MUHAMMED NOWFAL MSN INSTITUTE OF MANAGEMENT 5 INPUT FEEDBACK OUTPUT PROCESS EXTERNAL ENVIRONMENT

6. Operations plan One of the section that is included in the business plan Covers the operational aspect of the business The operations plan will ensure the business is able to produce the product or to provide the services that the business had planned in the marketing plan 10-06-2015 6 MUHAMMED NOWFAL MSN INSTITUTE OF MANAGEMENT

7. The operations plan comprises Process Planning Operations Layout Production Planning Material Planning Machine and Equipment Planning Manpower Planning Overheads Requirement Location Plan Business and Operations Hours Operations Budget Implementation Schedule 10-06-2015 7 MUHAMMED NOWFAL MSN INSTITUTE OF MANAGEMENT

8. Process planning Process planning involve the identification of the step-by-step processes from beginning to end in making the product or in providing the services For manufacturing business, the processes involved will be explained clearly such as the activity involved, its duration and the equipment used For service business, the process planning will explain all the steps that should be taken from start to finish to provide the service to the customer 10-06-2015 8 MUHAMMED NOWFAL MSN INSTITUTE OF MANAGEMENT

9. Operations Layout Illustrate the layout of the operations Layout refers to the arrangement of machine, equipment, workers and other facilities used in the operations The layout must be design in such a way that the production of goods and services can be done smoothly and efficiently There are three types of layout: Layout based on process Layout based on product Layout based on marketing 10-06-2015 9 MUHAMMED NOWFAL MSN INSTITUTE OF MANAGEMENT

10. Layout based on product This type of layout is suitable for a business that has product focus or continuous flow production The design of this layout is made according to the sequence of activities to product the product Example of a business that have this kind of layout is a food processing factory 10-06-2015 MUHAMMED NOWFAL MSN INSTITUTE OF MANAGEMENT 10

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12. Layout based on process This layout is suitable for a business that produce several products using similar processes This type of layout is design based on the similarity of processes where by machine and equipment that perform similar function will be grouped together Example of business with this type of layout is a steel workshop and a tailor store 10-06-2015 MUHAMMED NOWFAL MSN INSTITUTE OF MANAGEMENT 12

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14. Layout based on marketing This layout is designed with an intention to maximized the area available to display goods Examples of layout based on marketing can be observed in the retail business such as book store or departmental store 10-06-2015 MUHAMMED NOWFAL MSN INSTITUTE OF MANAGEMENT 14

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16. Production Planning It is important to make sure that the business is able to produce output or to provide services that is enough to fulfill the expected market demand or sales This can be achieved by having a good production planning In production planning, the business will determine how much output to produce for a certain period of time such as in a day, a week or a month The business may need the information from the marketing plan, e.g. average sales forecast 10-06-2015 16 MUHAMMED NOWFAL MSN INSTITUTE OF MANAGEMENT

17. Average sales forecast per month = RM 25,200.00 Price per unit = RM 15.00 Number of output per month = RM 25,200.00 RM 15.00 = 1,680 units If the number of working days per month is 24 days The amount of output to be produced per day is: = 1,680 units 24 days = 70 units per day 10-06-2015 17 MUHAMMED NOWFAL MSN INSTITUTE OF MANAGEMENT

18. Material Planning Material planning is done to determine the type and amount of raw materials need for the production Material planning involved four steps: Identify and list down the raw materials required Prepare the Bills of Materials Calculate the quantity of raw material required Identify the suppliers of raw materials 10-06-2015 18 MUHAMMED NOWFAL MSN INSTITUTE OF MANAGEMENT

19. Bills of Materials The bills of materials will contains a complete list of materials, parts or components and the amount needed to produce a unit of product 10-06-2015 MUHAMMED NOWFAL MSN INSTITUTE OF MANAGEMENT 19

20. Machine & Equipment Planning Steps to determine machine and equipment requirement: List out all machine and equipment required base on the process flow chart or process plan Determine the amount of machine and equipment required based on the venture capacity requirement Identify the suppliers that are reliable in term of price and after sale services 10-06-2015 20 MUHAMMED NOWFAL MSN INSTITUTE OF MANAGEMENT

21. Machine & Equipment Requisition Planning Schedule 10-06-2015 MUHAMMED NOWFAL MSN INSTITUTE OF MANAGEMENT 21

22. Steps to determine quantity for machine & equipment Determine the planned rate of production per day Determine the standard production time per unit for the planned machine Determine the machine productive time: Operation hours – (Setting up time + Down Time) 4. Calculate the amount of machine required using the formula given in the next slide 10-06-2015 MUHAMMED NOWFAL MSN INSTITUTE OF MANAGEMENT 22

23. FORMULA 10-06-2015 MUHAMMED NOWFAL MSN INSTITUTE OF MANAGEMENT 23

24. Manpower planning Steps to determine the amount of direct labor required by the venture: Determine the planned rate of production per day for the particular section of job Determine the standard time for a worker to produce one unit of product or to complete a particular job Determine workers productive hours: Working hours per day – rest time or workers idling time 4. Calculate the amount of direct labor required 10-06-2015 24 MUHAMMED NOWFAL MSN INSTITUTE OF MANAGEMENT

25. FORMULA 10-06-2015 MUHAMMED NOWFAL MSN INSTITUTE OF MANAGEMENT 25

26. Direct Labour Planning Schedule 10-06-2015 MUHAMMED NOWFAL MSN INSTITUTE OF MANAGEMENT 26

27. Location plan The entrepreneur has to make decision which premise is the best for the business to operate Choice of location is important because it will affect: Sales revenue Business operation cost Long term investment 10-06-2015 27 MUHAMMED NOWFAL MSN INSTITUTE OF MANAGEMENT

28. Factors to be considered for Choice of Location Distance from raw material / suppliers Labor supply Transportation Price of Land or rentals Infrastructure Climate Local Government Policy Security Facility for expansion and business development 10-06-2015 28 MUHAMMED NOWFAL MSN INSTITUTE OF MANAGEMENT

29. Business and Operation hours Business hours refer to the time the business is open to the customers Operation hours refer to the hours the workers have to work. For manufacturing, usually the business will operate on 8-hours per shift. Thus the entrepreneur will only decide whether the business will runs for one shift or more. This will depends upon the planning for production 10-06-2015 29 MUHAMMED NOWFAL MSN INSTITUTE OF MANAGEMENT

30. Overhead Requirement Determine the overheads that are required in the operations Overheads refers to requirements other than direct raw materials and direct labour Examples of overheads are indirect labour costs, indirect material, insurance, maintenance and utilities 10-06-2015 30 MUHAMMED NOWFAL MSN INSTITUTE OF MANAGEMENT

31. Operations Budget The business need to estimate the budget for the operations activities The operations budget can be categorized into: Fixed asset expenditure Monthly expenses Other expenses This operation budget is important because it will be one of the input to prepare the financial plan 10-06-2015 31 MUHAMMED NOWFAL MSN INSTITUTE OF MANAGEMENT

32. Fixed Asset Expenditure Refers to the investment on long term assets used in the operations to produce the product or services Monthly Expenses Refers to the payment made every month in the operations department Other Expenses These are expenses that are made and could not be categorized as fixed asset expenditure or monthly expenses 10-06-2015 MUHAMMED NOWFAL MSN INSTITUTE OF MANAGEMENT 32

33. Example of Operations Budget 10-06-2015 MUHAMMED NOWFAL MSN INSTITUTE OF MANAGEMENT 33

34. Implementation schedule Implementation scheduling involves sequencing and allotting time to all project activities To prepare implementation schedule, entrepreneurs has to decide how long each activity and compute the requirement on people and other resources Scheduling normally use Gantt Chart which is a planning chart used to schedule resources and allocate time 10-06-2015 34 MUHAMMED NOWFAL MSN INSTITUTE OF MANAGEMENT

35. Model of Schedule 10-06-2015 35 MUHAMMED NOWFAL MSN INSTITUTE OF MANAGEMENT

36. Q & A 10-06-2015 MUHAMMED NOWFAL MSN INSTITUTE OF MANAGEMENT 36

37. References Nawami H J (2008), “Fundamentals of entrepreneurship” Study.com Inc.com 10-06-2015 MUHAMMED NOWFAL MSN INSTITUTE OF MANAGEMENT 37

38. Thanks for your cooperation GROUP NO 1 S4 MBA 10-06-2015 MUHAMMED NOWFAL MSN INSTITUTE OF MANAGEMENT 38