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The Essence and Tasks of Integrated Planning

Lesson 10

Use the Muther matrix to describe the relationship between the following components and arrange them accordingly:

Part

Level

1. Meat and meat products

1+2=U

2+3=U

3+4=O

4+7=U

2. Frozen food

1+3=U

2+4=E

3+5=O

4+8=U

3. Dried food

1+4=E

2+5=U

3+6=O

5+6=O

4. Receive goods in

1+5=U

2+6=X

3+7=U

5+7=U

5. Canned food

1+6=X

2+7=O

3+8=U

5+8=U

6. Customer pays

1+7=O

2+8=U

4+5=E

6+7=A

7. Cakes

1+8=U


4+6=X

6+8=A

8. Non-food goods




7+8=U

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The Essence and Tasks of Integrated Planning

Notes: A: Absolutely important; E: Extremely important; I: Important; O: Normal; U: Not important; X: Undesirable.

Lesson 11

Use the Muther matrix to describe the relationship between the following components and arrange them accordingly:

Part

Level

1

1+2 = E

2+3=U

3+4 = A

4+7=U

2

1+3=U

2+4=E

3+5 = X

4+8 = E

3

1+4 = A

2+5 = X

3+6=O

5+6=O

4

1+5=U

2+6 = O

3+7=U

5+7 = X

5

1+6 = E

2+7 = A

3+8 = E

5+8=U

6

1+7 = U

2+8 = E

4+5 = O

6+7 = E

7

1+8 = O


4+6=X

6+8=A

8




7+8 = X

Notes: A: Absolutely important; E: Extremely important; I: Important; O: Normal; U: Not important; X: Undesirable.

Lesson 12

Through statistics, it can be seen that a workshop has the following volume of transportation between regions in 1 week:

50

100

0

0

20



30

50

10

0




20

0

100





50

0






0








Requirement: Please evaluate the current floor plan. Can you suggest a more efficient alternative?

Lesson 13

Statistics show that a factory has the following volume of transportation between regions in 1 week:


60

120

20

0

30



40

55

40

0




25

15

95





50

0






35







Requirement: Please evaluate the current floor plan. Can you suggest a more efficient alternative?

CHAPTER 5. INTEGRATED PLANNING


5.1. The nature and tasks of integrated planning

Aggregate planning is the rational combination of resources into the production process to minimize costs in all production processes, while minimizing the fluctuations of work and inventory levels for the medium term future.

In Chapter 2, we have considered methods of forecasting product demand in the short, long and medium term. Based on the forecast results, managers make plans to meet market demand in the most effective way. In the planning process, managers make 3 types of plans in terms of time, which are short-term plans, medium-term plans and long-term plans, in which the medium-term plan is the core of the integrated planning.

When making long-term plans, managers make plans, long-term plans belong to the strategy, mobilize the capacity of the enterprise, this is the responsibility of the leaders of the enterprise. This plan shows the path and development policy of the enterprise; positioning the enterprise; direction of research and development of new products; investment needs and solutions in a period lasting many years.

Medium-term planning begins only after decisions have been made about long-term capacity mobilization. In this type of planning, operational managers must make decisions related to the strategy to be pursued, and the consolidated plan for a period of 3 months, 6 months to 3 years. The consolidated plan must be consistent with the long-term planning principles set forth by the business leaders.

Short-term plans are usually built for a short period of less than 3 months, such as daily, weekly, monthly plans... Short-term plans are usually built by operational managers in workshops, production teams or groups. Workshop managers and production team leaders base on the assigned medium-term master plan to allocate work for each week and month to implement. The tasks to be done to implement short-term plans are: assigning work, making production schedules, placing orders...

The basic contents and timeframe of each type of plan are shown in Figure 5.1.

Time

Figure 5.1: Types of production plans

Although different in content, time, and level of detail, all three types of plans are carried out in a unified sequence and process, including the following stages: determining needs; calculating capabilities; choosing a strategy to pursue and balancing the plan. These stages are carried out sequentially and in parallel, interspersed with each other, supporting each other.

The medium-term plan has three main tasks:

- Comprehensive planning of inventory and production levels to satisfy market demand so that the total inventory cost and production costs are close to the smallest level;

- Allocate production levels and reserve levels for each product type so that the sum of the allocated values ​​must equal the total value and the total costs remain almost at their lowest;

- Mobilize all resources, especially human resources to meet market needs.

5.2. Strategies in integrated planning

When developing aggregate plans, production managers must answer the following questions:

- Can reserves be used to cope with fluctuations in demand during the planning period?

- Once demand changes, should businesses apply solutions to regulate the workforce?

- Once demand changes, should the business hire additional workers for day labor, part-time work, overtime work, or let workers take paid leave?

- If demand changes, can the business stabilize the workforce combined with outsourcing or outsourcing to others to still meet consumer demand at the lowest cost?

- When needs change, should businesses apply a single solution (such as organizing overtime, hiring workers...) or apply multiple solutions together?

Answering the above questions, businesses will find ways to satisfy consumer needs in accordance with market conditions and bring high efficiency to the business, which is the comprehensive planning strategy in business administration.

Based on different criteria, integrated planning strategies can be divided into different types.

- Pure strategy and mixed strategy: If at the same time we only change one factor, we use "Pure strategy". If we simultaneously combine many different factors under changing conditions according to consistent principles, we use mixed strategy for comprehensive planning.

- Active strategy and passive strategy: If the manager builds a production and business plan in a way that changes the business conditions to adapt to market changes, it means that the manager is pursuing a passive strategy. On the contrary, an active strategy helps the business influence market demand to proactively develop a response plan.

5.2.1. Strategy for changing reserve levels

According to this strategy, the manager can increase the inventory level during the low demand period to provide additional supply for the future high demand period. If we choose this strategy, we will have to bear the increase in the cost of storage, insurance, preservation, damage and investment capital. This strategy has the following advantages and disadvantages:

- Advantage:

+ Stable production process, no unusual changes;

+ Timely satisfy customer needs;

+ Simple production process management.

- Disadvantages:

+ Many types of costs increase such as inventory costs, insurance costs...

+ If there is a shortage of goods, sales will be lost when demand increases.

This strategy is often applied to manufacturing businesses, not suitable for service activities.

5.2.2. Strategy to change human resources according to demand

Based on the production level of each stage, managers decide to hire more workers when needed and be ready to lay off workers when not needed.

This strategy has the following advantages and disadvantages:

- Advantage:

+ Avoid risks due to erratic fluctuations in demand;

+ Reduces some costs of other options such as inventory costs...

- Disadvantages:

+ Hiring and firing costs both cause large expenses;

+ Businesses can lose reputation due to frequent layoffs;

+ Affects workers' morale, can reduce productivity of the majority of production workers in the enterprise.

This strategy is suitable for places where workers do not need specialized skills or for those who work part-time to earn extra income.

5.2.3. Strategy to change employee work intensity

In this strategy, the company can fix the number of employees but change the number of working hours. When demand increases, overtime can be organized, and during periods of low demand, employees can be given time off without having to be laid off.

- Advantage:

+ Help businesses respond promptly to fluctuations in market demand;

+ Stabilize human resources, reduce costs related to vocational training and apprenticeship;

+ Create more jobs, increase income for workers.

- Disadvantages:

+ The cost of paying for overtime is often high;

+ Workers get tired easily due to overwork;

+ Risk of not meeting demand.

This strategy helps to increase flexibility in aggregate planning.

5.2.4. Outsourcing or outsourcing strategy

During periods of high demand, businesses can sign outsourcing contracts. Conversely, businesses can also receive contracts from outside to do in-house when the business has excess capacity to take advantage of surplus facilities and labor. This strategy has the following advantages and disadvantages:

- Advantage:

+ Respond promptly to customer needs;

+ Make full use of machinery, equipment, labor, and production area;

+ Create agility and flexibility in operations.

- Disadvantages:

+ Difficult to control time, output and quality in case of outsourcing;

+ Must share profits with the processing party;

+ Create opportunities for competitors to approach customers, reducing the competitiveness of businesses. In many cases, businesses may lose customers due to applying this strategy.

5.2.5. Strategy for using part-time workers

To reduce cumbersome administrative procedures and to take advantage of unskilled human resources, businesses can use part-time workers. This strategy is especially effective in service businesses such as loading and unloading, transporting goods, retail stores, supermarkets, etc.

- Advantage:

+ Reduce administrative procedures and responsibilities in labor use;

+ Increase flexibility in operations to best satisfy needs;

- Disadvantages:

+ Creates fluctuations in labor, high training costs for new workers;

+ New employees easily leave the company because there is no binding responsibility;

+ Labor productivity and product quality may decrease or not be high;

+ Complex production scheduling.

This strategy is often applied to unskilled jobs and temporarily unemployed people such as students, housewives, retirees...

5.2.6. Demand impact strategy

When market demand is low, businesses can influence demand by advertising, promoting, discounting, expanding sales forms... This strategy has the following advantages and disadvantages:

- Advantage :

+ Improve capacity utilization efficiency;

+ Increase the number of customers and demand;

+ Increase business competitiveness.

- Disadvantages:

+ Demand is often uncertain and difficult to forecast accurately;

+ Discounts can upset regular customers.

5.2.7. Pre-deposit strategy

During periods of high demand, businesses that are unable to meet demand can use the “pre-deposit” strategy. Pre-deposit is a form in which businesses that need to purchase goods place orders, pay in advance or will definitely pay for goods or services in the future to ensure that goods or services will be provided at the exact time they need them. In this form, businesses that receive deposits must satisfy customer needs according to requirements at specific times agreed upon by both parties, such as buying parking spaces in advance, booking parties, renting cars, etc.

- Advantage :

+ Stabilize production capacity;

+ Create a stable source of income for the business;

- Disadvantages:

+ May lose customers;

+ Can upset customers when their needs are not met;

5.2.8. Seasonal product production strategy

To stabilize capacity, businesses can combine production of different seasonal products that complement each other.

- Advantage:

+ Take advantage of the production resources of the enterprise;

+ Stabilize human resources;

+ Keep regular customers;

+ Avoid seasonal effects.

- Disadvantages:

+ May require skills and equipment that the business does not have;

+ Production coordination must be extremely flexible and sensitive.

5.3. Aggregate planning methods

5.3.1. Intuitive planning method

The intuition method is a qualitative method that uses intuition to plan.

This method is widely used in businesses, especially small and medium-sized businesses. In large businesses, conflicts often occur between functional departments. For example, the marketing manager wants the business to have many items to sell and a large enough inventory to meet customer demand.

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