Capacity Planning and Management - Case Study Example

?Capa Planning and Management Table of Contents Session A 3 Strategic Nature of the Facility Decisions 3 Balancing Supply And Demand 3 Role of Aggregate Planning 4 Material Requirements Planning and Enterprise Resource Planning 4 ERP Forming the Basis of Supply Chain Integration (SCI) 5 Section B 6 Benefits, Costs and Risks of Six Sigma Program 6 Integration of the Six Sigma with the Functional Areas 7 Role of Six Sigma in Corporate Strategy 8 References 9 Bibliography 11 Session A Strategic Nature of the Facility Decisions The facility decisions play a vital role in the businesses and tend to be the long-term capacity planning decisions. They tend to be strategic in nature since the decisions involved are quite complex and involves the organizational functions that need to be formulated by the corporate level. It is important to consider the cross-functional teams because of the size of the market that tends to explain the total amount of the capacity that is needed and the required finance. Further, there is likelihood that the human resource issues in relation to the implementation of the new facilities may arise. It has been noted that the facility decision involves the subjects such as finance, marketing, human resource, accounting and engineering. Therefore, there is requirement of the cross-sectional teams in facility decisions. Balancing Supply And Demand In order to describe the aggregate planning process, the sales and the operation planning (S&OP) can be used. It can be stated that S&OP tends to match the demand as well as the supply by making use of the cross-functional team approach. The diverse cross-functional team tends to meet the general manager for discussing on the sales forecast along with the supply plan and thus take the necessary steps to balance the supply and demand. Role of Aggregate Planning The main task of the aggregate planning is to equalize the supply along with demand of the outputs within the medium-term range. Since the demand of the product seems to be uncertain and fluctuating, with the help of the aggregate planning the general output level for the medium-term future is set. It is not only the yield level that is planned with the help of the aggregate planning method of the operations management but also aggregate planning method tends to determine the suitable resources input mix that can be utilized. It can be stated that the main objective of the aggregate planning is to achieve a plan of production that can make optimum exploitation of the resources of the organization for the purpose of satisfying the expected demand. By making utilization of the ‘level strategy’ and the ‘chase strategy’ or the blend of the two, a firm is able to meet the aggregate demand in the medium-term (Pan & Kleiner, 1995). Material Requirements Planning and Enterprise Resource Planning It can be stated that the manufacturing organizations are required to handle the complexities since there are few thousands of the products, parts, processes and uncertainties that they need to manage. However, it would not be sensible to reveal that there are not any possibilities to manage the uncertain situation. With the assistance of the computerized planning as well as control system named as material requirements planning, it is possible to manage any kind of situation. On the other hand, ERP (Enterprise Resource Planning) is also a significant aspect in operations management. ERP is generally a company wide resource planning system utilized for the purpose of planning along with the controlling of the resources MRP can be utilized to assist the managers to keep the record of the orders via the manufacturing process and thus assist in moving the accurate amount of the material to the production department (Scarlett, 2006). It can be identified that there is requirement of the five elements to make the MRP successful. The five elements are: execution planning, exact data, adequate computer system, and management support and users knowledge. It can be stated that the ERP system can be successfully utilized if the management has the required expertise for handling the ERP system. ERP Forming the Basis of Supply Chain Integration (SCI) It can be stated that with the numerous characteristics of the ERP systems such as data reliability, real-time accessibility and uniform, business process can assist in creating a platform in which integration with the external entities can be possible in the supply chain. However, it is worthy of mentioning that since the ERP system forms the basis of the supply chain management and permitted transfer of the relevant information across the SCI, the collaboration process seems to be complex. There is requirement of the systemic perspective of the supply chain by the partners concerned (Seethamraju, n.d.). Section B Benefits, Costs and Risks of Six Sigma Program The potential benefits that can be expected from the Six Sigma system are that it tends to strengthen the company and also boost the sales as well as the cash flows of the company. Furthermore, the main aim of the Six Sigma method is to satisfy the customers in a better manner and also to promote the development of the management. It was further identified from the case study that the Six Sigma approach has enabled 3M to become outstanding suppliers at numerous markets in which the company tends to participate by providing its customers innovative products. The other benefits that can be received from the implementation of the Six Sigma approach include a systematic as well as constant approach to the activities of the business. Six Sigma is the best method that can be utilized to accelerate and thus improve the output of the business organization. The main risk associated with the implementation of the Six Sigma method has led a few of the companies not to implement the program. The risk identified was that it was impossible for them to develop their processes to ‘3.4 parts for each million defects’ that has been stated in Six Sigma. The complications and statistics related to Six Sigma leads to reluctance towards implementing the system. Furthermore, the companies generally believe that the process is a new concept that each of the companies are embracing, however with the pace of time it will also be outdated and ineffective method. The training cost associated with the implementation of the Six Sigma was identified to be high (Schroeder & Et. Al., 2007). Integration of the Six Sigma with the Functional Areas The functional areas of the 3M can be included into the Six Sigma concept because defects are eliminated to a great extent by using the Six Sigma concept. The operational performance of the company tends to improve and thus profits tend to generate. The Six Sigma concept is mainly associated with the manufacturing department of the organization, however it also has a role to play in marketing, sales finance and human resource. Six Sigma can be implemented at any activity that tends to be goal directed. However, it requires to be organized in an effective way. In both marketing and sales department, there is requirement of defining the value proposition and fragmentation of the market so that the measurement becomes effective and reliable. Six Sigma assists in determining the appropriate customers that can be targeted. It further tends to reduce the overall cost and errors in all the functional areas (Webb, 2003). The management needs to invest money equally in all the departments so that the Six Sigma can be implemented effectively and the benefits can be sought within a short span of time. The management needs to train and inform its employees regarding the changes that are being administered in the organization. More funds need to be poured into the company so that the changes can be effectively implemented. Numerous strategies can be adopted to motivate the staffs so that they do not oppose the changes. Role of Six Sigma in Corporate Strategy It can be stated that Six Sigma tends to integrate an organization with its market place. It further tends to integrate the companies strategies, customers, culture and the processes so that the businesses can achieve outstanding results. Since Six Sigma tends to rely heavily upon the statistics and factual data and upon the feedback methodology, the corporate can be benefited with the capability to make improved decision making. The strategic planning as well as execution tends to become more successful with the implementation of Six Sigma (Fontaine, 2007). References Fontaine, C. W., (2007). Six Sigma and Organisational Culture. White Paper. Retrieved Online on June 30, 2011 from http://www.professorfontaine.com/files/Six_Sigma_and_Organizational_Culture.pdf Pan, L. & Kleiner, B. H., (1995). “Aggregate Planning Today”, Work Study. Vol: 44, Iss: 3, Pp: 4-7. Scarlett, R., (2006). CIMA Learning System 2007 Performance Evaluation. Butterworth-Heinemann. Seethamraju, R., (No Date). Do Enterprise Systems Enable Supply Chain Integration. Literature Review. Retrieved Online on June 30, 2011 from http://www.ebrc.fi/kuvat/Seethamraju_Do_paper.pdf Schroeder, R. & Et. Al., (2007). Case Study: Six Sigma at 3M, Inc. Tata McGraw-Hill Education. Webb, M., (2003). Introduction to Six Sigma for Marketing and Sales. Impact. Retrieved Online on June 30, 2011 from http://www.impactcommunicationsinc.com/pdf/nwsltr_2003/ICINwsltrff0309.pdf Bibliography Schroeder, R. & Et. Al., (2010). Operations Management: Contemporary Concepts and Cases. McGraw-Hill/Irwin. Read More