Production Planning and

Control: Heritage and Current

Issues
 StrategIES and Issues during a
product’s life cycle
• A product undergoes a cycle which
includes
– Introduction
– Growth
– Maturity and
– Decline
• Issues and strategies should be
according to the phase of PLC.
Current Issues and Trends in Operations

•It is important for a manager to understand

the current issues in competitive
environment and
gain insight into future trends
• Changes are taking place as we are moving
from the 20th to the 21st century
•Many of these changes have direct impact on
the field of operations
•Major changes are summarized in Table
 Table: Changing corporation

Characteristic 20th Century Corp 21st Century Corp

Organization The pyramid The web

Focus Internal External
Style Structure Flexible
Source of strength Stability Change
Resources Physical assets Information
Operations Vertical Integration Virtual Integration
Products Mass production Mass Customization
Reach Domestic Global
Financials Quarterly Real time
 Table: Changing corporation-Contd.

Characteristic 20th Century Corp 21st Century Corp

Inventories Months Hours

Strategy Top-down Bottom-up
Leadership Dogmatic Inspirational
Workers Employees Employees, free agents
Job expectations Security Personal Growth
Motivation To compete To build
Improvements Incremental Revolutionary
Quality Affordable best No compromise
 Challenges in OM/PPC and
Significant Trends
From To
• Local or national focus • Global focus
• Batch shipments • Just-in-time
• Low bid purchasing • Supply chain
• Lengthy product • Rapid product
development development
• Standard products • Mass Customization
• Job specialization • Empowered employees,
teams
 Recent Trends and Challenges
•Global markets, global sourcing and global operations
•Virtual Companies
•Greater Choice, more individualism
•Emphasis on service
•Speed and flexibility
•Supply Chains
•E-commerce
•Technological advances
•Knowledge
•Environmental and Social Responsibilities
 Global markets, global sourcing and global
operations
•In spite of political stability and threats of terrorism
worldwide, competition continues
•Look for more partnering rather than mergers and
acquisitions of foreign firms
• Global structuring, newly industrialized economies,
deregulation, and the Internet will continue to open new
markets worldwide.
• Production will take place with global supply chains
reaching around the world.
• Operations managers are required to provide global
service for local needs
 Virtual Companies
•A situation is emerging driven by strategic alliances
and cooperative specialization
•Structure will no longer resemble a pyramid
•A web of autonomous business units, partners,
spinning off companies, contractors and freelancers is
becoming commonplace
•Boundaries of individual firms are becoming harder to
define.
•Groups of individuals will form to meet a need,
dissolve when the need is met, and reform to meet
another need.
 Greater Choice, More Individualism

•Days of mass production and mass consumption are

over.
•Mass customization will be the reality.
•Individualized products and services will make huge
savings for the producer.
•Producer will no longer require to guess what people
want.
•Companies race to get breakthrough ideas to the market
first.
•Expected life of products will continue to decrease.
 Emphasis on service

•Customer service is a competitive battleground that

will continue to intensify.
•About eighty percent of the jobs in developed countries
are provided by service sector.
•Companies will concentrate more on providing service
rather than producing the goods.
 Speed and Flexibility

•With the Internet comes speed

•Speed of
–Information
–Actions
–Delivery
–Innovation
•Result- rapidly changing environment
•Our production systems must be flexible
 Supply Chains
•Few companies will have the expertise or the inclination to
–Create
–Make or
–Market their products by themselves
•Focus on what they do best and out source the rest
•Vertical integration of operations within the company will be no
more there
•Rather virtual integration of outside suppliers is becoming the
norm
•Operations manager will be engaged in managing supply chains or
supply webs
 C-Commerce (Collaborative commerce)

• ultimate benefit of e-commerce interactions

•Internet has brought together the suppliers, manufacturers and
customers
•C-commerce can improve the efficiency and effectiveness of
operations by reducing
– time to market
– time of order fulfillment
–Economies of scale
–Purchasing costs and
–Transaction costs
 Technological advances

• IT, e-commerce and telecommunications will

continue to advance at a rapid rate
•Smart materials, intelligent sensors, AI, and
nanotechnology will dramatically change
–How people work
–How products are made and
–How firms compete
• This is the beginning
 Knowledge

• Competitive advantage of products, services and

technologies is short-lived.
•Companies must attract and retain the best
thinkers to stay ahead of their competition.
•Ability to create, absorb, and utilize knowledge is
the paramount skill of the new economy.
 Knowledge

•To perform the best in the world market , countries

will require to have
–the best R & D
–The best education system
–The brightest people and
– the savvy (know-how) to use those assets to
their fullest
Environmental and Social Responsibilities

• Companies must consider the environmental

impact of their products and services in the context
of
• design,
• manufacture,
• distribution,
• use, and
• disposal.
Environmental and Social Responsibilities

•Social responsibilities are especially important

as the markets and resources of developing
nations become more available to global entities.
 Global operations: examples

• To sustain in business global operations is

becoming necessary.
• Almost all big companies have or planning to
have global operations.
• Examples of some important companies are
presented in the following slides.
 Our standing and OUR ACTIONS
• Muslim Ummah - we have a rich history.
• Having abundant resources, our standing is obvious.
• The gap is very big.
• However, not impossible to catch up.
• There is plenty of scope in terms of resources – both natural
and human.
• Look for the future which is full of challenges.
• Be prepared to face it .
• It is you people who require to prepare for future
leadership.
 The Planning Process
Production Marketing Finance
Capacity Customer Cash flow
Inventory demand

Procurement Human resources

Supplier Manpower
performance planning

Management Engineering
Return on Aggregate Design
investment production completion
Capital plan

Change
production
Master production plan?
schedule

Figure 14.1
The Planning Process
Master production
schedule Change
master
Change production
requirements? Material schedule?
requirements plan
Change
capacity? Capacity
requirements plan

No Is capacity Is execution
Realistic? plan being meeting the
met? plan?
Yes
Execute capacity
plans

Execute
material plans

Figure 14.1