Business Planning and Control
In any construction project, whether it be a 20 storey skyscraper or a family home, two of the most vital elements considered are, firstly what environment will the structure be subjected to, and secondly what is the critical foundation required to ensure that the structure stands.
The very same can be said for the business structure. The economic environment will impact the business, the foundations must be secure to ensure survival. The challenge with a business is that being an organisation, an organism of sorts, internal change impacts those foundations. This can mean that while the goal posts may have shifted, due to the environment, so to the foundation may also be shifting, making that goal much more of a challenge. It is critical therefore to ensure that the fundamentals, the foundational aspects of operational performance are maintained at all costs.
An organisation with good operations planning and control will have lower inventory (both finished goods and raw materials in a manufacturing environment) and therefore a shorter cash to cash cycle. This control over inventory will also have direct, bottom line benefits such as reduction in inventory obsolescence and therefore stock write off or markdown clearance pricing.
Better inventory control also means that there are often less changes to plan due to raw material out of stocks, which in turn reduces your unscheduled production down time. And by the way, while we are talking raw materials, having better raw material data means that you have better communication with suppliers and therefore better supplier relationships, this in turn can lead to more mutually beneficial cost savings.
Here are two simple questions that will help to identify if your organisation needs improved control.
Question 1: Are you holding to much capital in inventory, and still having out of stocks to the customer and/or production, do you need to expedite orders with suppliers, are you writing off or mark down large amounts of inventory?
Question 2: Are your purchasing and planning teams using your ERP system or are they operating off system in a spread sheeting package or other application? If they don't trust the planning system for their decision making, should you?
The economic conditions of the time will force organizations to review their operations for improved cost effectiveness. The right decisions made now can be extremely beneficial to you and all of your workforce.
Operations planning and control is the cornerstone to effective decision making, profitability and adaptation in a rapidly changing environment.
For a free copy of my e-Book "Operations Control. A guide to delivering improved Planning and Inventory control." "email me at info@operationscontrol.com with the subject "Operations e-book"
Article Source: ArticlesBase.com
