POM-Long-Term-Planning-and-Innovation.pptx

long term planning

1. PRODUCTION & OPERATIONS MANAGEMENT LONG TERM PLANNING INNOVATION BY POM FOR NEW PRODUCT DEVELOPMENT 1

2. LONG TERM PLANNING Definition Planning involving a company’s facilities, location, and layout It has four main components that interact with each other The regional LOCATION of a plant, facility, or branch The specific STRUCTURE and SITE to be used The EQUIPMENT choice The LAYOUT of the plant, facility, or branch

3. FOUR CONCERNS: LOCATION Qualitative factors affecting location decisions: Enhancing SERVICE CONTACT Availability of PROCESS REQUIREMENTS JUST-IN-TIME (JIT) Orientation PERSONAL PREFERENCES of management Closeness to PROCESS INPUTS GOVERNMENTAL ISSUES Closeness to PROCESS OUTPUTS SITE AND PLANT AVAILABILITIES

4. QUALITATIVE FACTORS AFFECTING LOCATION DECISION Enhancing SERVICE CONTACT Faster service usually equates to good service More relevant to service industries Generally, customers want to travel less to avail services One exception is the tourism industry where people don’t mind travelling long distances to avail

5. QUALITATIVE FACTORS AFFECTING LOCATION DECISION JUST-IN-TIME (JIT) Orientation Business that put more emphasis in JIT prefer to be closer to their suppliers The closer you are to inputs, the lesser risk of JIT production delays Suppliers also prefer doing business to those nearer to them

6. QUALITATIVE FACTORS AFFECTING LOCATION DECISION Closeness to PROCESS INPUTS More of a cost concern rather than an operational concern Generally, the closer you are to process inputs, the cheaper the total production costs Cheaper freight costs equate to larger margins

7. QUALITATIVE FACTORS AFFECTING LOCATION DECISION Closeness to PROCESS OUTPUTS The closer you are to customers, the more you are preferred Cheaper freight costs equate to larger margins Faster response time to customer complaints or product returns, and the easier it is to gather feedbacks

8. QUALITATIVE FACTORS AFFECTING LOCATION DECISION Availability of PROCESS REQUIREMENTS Enough utilities (water, power, communication, etc.) must be available Some processes require specialized inputs or labor not found in other locations

9. QUALITATIVE FACTORS AFFECTING LOCATION DECISION PERSONAL PREFERENCES of management Management may have underlying preferences and biases These may not have any, or even override, economic benefits May have historical, cultural, or social bases.

10. QUALITATIVE FACTORS AFFECTING LOCATION DECISION GOVERNMENTAL ISSUES Tax, tariffs, trade, and legal factors may either be favorable, unfavorable, or even restrictive Some businesses may be illegal in some countries Trade agreements between countries provide competitive advantage Change in national stability are usually considered risks

11. QUALITATIVE FACTORS AFFECTING LOCATION DECISION SITE AND PLANT AVAILABILITIES Interaction between existing facilities or future direction of the company is an important consideration Interrelated and/or codependent operations are more synergistic the closer they are to one another Competing operations gain more market share and coverage the farther they are apart

12. FOUR CONCERNS: STRUCTURE AND SITE Dependent on the location and are often considered simultaneously with it Work configuration influences structure decisions Both external and internal appearances matter most of the time Companies can either rent, build, or buy A cost-benefit analysis must be performed for financial figures while qualitative traits must be assessed using a scorecard.

13. FOUR CONCERNS: STRUCTURE AND SITE The following elements should be considered in choosing a structure type and site based on the companies intention: Sufficient FLOOR SPACE Sufficient CEILING HEIGHT Optimal AISLE WIDTH Desired ILLUMINATION Number of STORIES Appropriate ROOF SHAPE

14. FOUR CONCERNS: STRUCTURE AND SITE Dependent on the location and are often considered simultaneously with it Work configuration influences structure decisions Both external and internal appearances matter most of the time Companies can either rent, build, or buy A cost-benefit analysis must be performed for financial figures while qualitative traits must be assessed using a scorecard.

15. COST DETERMINANTS In the cost-benefit analysis of available options, the following cost must be considered: Cost of structure and site (buy, rent, or build) Opportunity cost of not relocating Cost of location and relocation studies Cost of production stoppage

16. COST DETERMINANTS Change in lead times Difference in utility cost Tax considerations Insurance cost Difference in labor cost Separation fee of retrenched workers

17. COST DETERMINANTS Difference in environmental compliance costs Cost differential arising from varying risks of disasters and its mitigating measures Effects of the difference in weather to the degree of facility wear and tear Difference in legal and other professional costs

18. SCORING MODELS FOR QUALITATIVE TRAITS OF FACILITIES To create an appropriate scoring model, the following steps can be followed: All factors that affect the selection are identified Each factor is assigned a weight Alternatives are listed Alternatives are evaluated Score per factor per alternative is calculated Total weighted scores per alternative are tallied

19. SCORING MODELS FOR QUALITATIVE TRAITS OF FACILITIES Step 1: All factors that affect the selection are identified FACTOR Labor Climate Quality of Life Transportation System Proximity to Markets Proximity to Materials Utilities

20. SCORING MODELS FOR QUALITATIVE TRAITS OF FACILITIES Step 2: Each factor is assigned a weight FACTOR Wgt Labor Climate 30 Quality of Life 16 Transportation System 16 Proximity to Markets 14 Proximity to Materials 12 Utilities 12

21. SCORING MODELS FOR QUALITATIVE TRAITS OF FACILITIES Step 3: Alternatives are listed FACTOR Wgt A B Labor Climate 30 Quality of Life 16 Transportation System 16 Proximity to Markets 14 Proximity to Materials 12 Utilities 12

22. SCORING MODELS FOR QUALITATIVE TRAITS OF FACILITIES Step 4: Alternatives are evaluated (sample, using a scale of 1 – 10) FACTOR Wgt A B Labor Climate 30 8 7 Quality of Life 16 5 7 Transportation System 16 4 8 Proximity to Markets 14 8 5 Proximity to Materials 12 8 9 Utilities 12 5 7

23. SCORING MODELS FOR QUALITATIVE TRAITS OF FACILITIES Step 5: Score per factor per alternative is calculated FACTOR Wgt A Wgt x A B Wgt x B Labor Climate 3.0 8 24.0 7 21.00 Quality of Life 1.6 5 8.0 7 11.2 Transportation System 1.6 4 6.4 8 12.8 Proximity to Markets 1.4 8 11.2 5 7.0 Proximity to Materials 1.2 8 9.6 9 10.8 Utilities 1.2 5 6.0 7 8.4

24. SCORING MODELS FOR QUALITATIVE TRAITS OF FACILITIES Step 6: Total weighted scores per alternative are tallied FACTOR Wgt A Wgt x A B Wgt x B Labor Climate 3.0 8 24.0 7 21.00 Quality of Life 1.6 5 8.0 7 11.2 Transportation System 1.6 4 6.4 8 12.8 Proximity to Markets 1.4 8 11.2 5 7.0 Proximity to Materials 1.2 8 9.6 9 10.8 Utilities 1.2 5 6.0 7 8.4 Total 65.2 71.2

25. FOUR CONCERNS: LAYOUT It is the physical arrangement of facilities, equipment, or components within a manufacturing plant or a service facility Good plant layout results in product and process quality improvements, cost benefit productivity improvements, and employee health benefits. The cost of layout plan improvement is compared with the benefits to decide whether it must be implemented

26. LAYOUT TYPES Job Shop Process Product-oriented Cellular Group Technology Combinations of Product and Process Fixed-position (Static)

27. LAYOUT TYPES Job Shop Process - similar types of equipment or jobs are grouped together - facilitates processing of many different types of work in relatively small lots - equipment mobility and layout flexibility allow easy rearrangement once needed - space must be allocated for work completed at one station and waiting for access in another station

28. LAYOUT TYPES Product-oriented - equipment and transport system are arranged to make the product as efficiently as possible - prohibits disruptions to the flow - typical in assembly lines - changes in process means major change in layout

29. LAYOUT TYPES Cellular - a team of people and machines working together to produce a dedicated family of parts - engineered to facilitate efficient transfer of work between stations in the cell - setup and transfer are programmed

30. LAYOUT TYPES Group Technology - similar to cellular but with more emphasis on computer programming controls - it groups similar machines or technologies together - based on the advantage of having similarity of design features

31. LAYOUT TYPES Combinations of Product and Process - parts of production that require high volume adapt a product-oriented layout - parts of production that have low volume adapt a job shop process layout - also called a hybrid layout

32. LAYOUT TYPES Fixed-position (Static) - product does not move - resources such as materials and people are brought to the product - examples are manufacturing of ships, planes, or construction of buildings

33. LAYOUT CRITERIA Capacity – maximize total output and throughput rates Balance – synchronization of throughput and operations Investment and Operating Costs – minimize expenditures Flexibility to change layouts – maximize ease of change Amount of WIP – minimize units of inventory Distance – minimize total travel time and distance of parts Storage and Handling – minimize space used for storage and minimize moving equipment

34. INNOVATION Definition the creation and implementation of new ideas, methods, processes, products, or technologies that result in improved operational performance, increased efficiency, enhanced competitiveness, and added value for customers the goal is to produce goods and services that please enough customers to exceed the breakeven point by a large enough margin to make the ROI acceptable to investors.

35. WHY INNOVATE? Innovation is necessary for HUMANITARIAN OPERATION AND CRISIS MANAGEMENT Innovation is essential for SUSTAINABILITY The following are considered as the pillars of sustainability Environment Economic Factors Social Dimension

36. INNOVATION All organizations must innovate to stay relevant and to continue to succeed. To compete for new ideas, resources, and customers, the following should be undertaken Patent Protection Continuous Innovation as an organizational attitude Rigorously and continuously test innovations Coordinated teamwork within the New Product Development (NPD) team

37. INNOVATION: Continuous Project Management Continuous Project Management is a successful innovation. Concepts are best derived from a menu if former and existing products. Innovation of these products follow this cycle: Products are developed with a concept and its goals Design alternatives are proposed to achieve the goals Prototypes are created for consumer testing Process output is ramped to match expected demand Note: Testing is conducted before moving to the next step

38. INNOVATION: Product Platform Planning the strategic process of designing and developing a common foundation or platform that can be used to create multiple related products or product variations. It involves identifying and defining the core elements, components, technologies, and processes that can be shared across a range of products, enabling efficient and cost-effective product development and production. It can be based on: Logical evolution (e.g., increasing screen size or decreasing thickness) Swapping out less good components for better ones Adding entirely new functions Expanding variety

39. INNOVATION: Modularity a production strategy based on the concept of swappable components any one of which can be plugged into the mother unit. Each swappable component has its own capabilities.

40. INNOVATION: Platform Differentiation Platform Differentiation is usually applied to address difference in demographics. Certain groups of customers have different cultures, preferences, or beliefs that affect product innovation

41. INNOVATION: Pitfalls to Avoid As innovators are often the originators of new products, they often move too swiftly in their goal to be the first in the market that they grow careless and trip-up, allowing imitators to capitalize on their mistakes. The following are common pitfalls that innovators should avoid: Bad Timing Over-claiming Under-performing Failure to Up-grade fast enough compared to competitors

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