Section – Production plan in the business plan. Business plan. Production plan. Part 1

Business plan. Production plan. Part 1.

Briefly characterize the production plan, it is a plan of actions through which the enterprise plans to produce products in the required volume, of the required quality, within a certain time frame.

The main points of the plan that need to be reflected:

Description of the technological process;

Basic requirements for organizing the production process;

Product production program;

Composition of the necessary equipment;

Cost of fixed production assets;

The need for raw materials, materials, components;

Depreciation of fixed assets;

Suppliers of raw materials and approximate prices, terms of delivery;

Alternative sources of supply of material resources;

Cost of manufactured products;

Environmental safety of the project - activities, costs, efficiency.

Classification of production plans:

1. According to the breadth of coverage, they are distinguished: strategic, operational.

2. According to the time frame, they are distinguished: long-term, short-term.

3. By nature, they are distinguished: general, specific.

4. By method of use: permanent, temporary.

Any investor is interested in who he is dealing with: a newly created manufacturer of goods or an existing enterprise that has been operating on the market for a long time, so this issue should be clarified at the very beginning. Moreover, the situation here may look like this: the company that is the initiator of the project already has experience, but the project is being created for a newly created subsidiary, which will be engaged in the production of goods.

The composition and structure of production capacities in this section can be considered briefly, and their detailed characteristics can be included in the appendix of the business plan. Although this is not necessary - it all depends on the specifics of a particular project.

It is very important and carefully to approach the description of issues related to the supply of raw materials, materials and components - after all, the uninterrupted operation of the technological process largely depends on this. It should be indicated what reserves of raw materials and other material assets the enterprise has at the time of the start of production, and how supplies will be organized in the future. As noted above, if such an opportunity exists, it is advisable to characterize each prospective supplier, indicating approximately the following data: full name and location, experience in the market, experience of cooperation with this supplier to date (if any), business reputation of the supplier, which other well-known business entities worked with this supplier, etc. If the raw materials used in the production process require certain storage conditions (temperature conditions, certain humidity, etc.), the business plan should indicate how these conditions are ensured. Perhaps an investor who is not very knowledgeable about the intricacies of production will not pay attention to the absence of this information, but if it is available, firstly, it will be interesting for him to get acquainted with it, and secondly, it will give him reason to believe that the business plan has been drawn up carefully and it does not miss any important points.

The provision of an enterprise with equipment and fixed assets is the most important condition, without which it is, in principle, impossible to begin the production process. Therefore, special attention must be paid to this issue in the business plan. If at the moment the manufacturing enterprise does not have all the necessary equipment, then the reasons should be explained in detail (perhaps the problem is precisely the lack of funding) and indicate the ways and expected time frame for solving this problem.

One of the most interesting points in the section of the business plan under consideration will be the description of the technological process. Moreover, as noted above, this description should be accompanied by visual diagrams and illustrations. The reader of the business plan should clearly see where and how all types of raw materials, materials, components and other valuables necessary for the production of products will be supplied to the enterprise, and then to the workshops, in which workshops and how they will be processed into finished products (otherwise speaking, it is necessary to fully illustrate the routes of movement of raw materials and supplies), and where the finished products will be delivered from the enterprise.

It is recommended to pay special attention to quality control issues in the diagrams. To do this, you should mark those stages of the production process at which the quality of the manufactured products will be checked, indicating at the same time what standards the enterprise is guided by in quality control.

A more important place in the production plan should be given to energy supply issues, namely, requirements for energy sources, and the availability of all necessary types energy. Here it is worth mentioning how the enterprise is prepared for sudden interruptions in energy supply.

Project management

Today, many manufacturing firms operate on a project basis. A project is a series of interrelated works that has clear starting and ending points. Projects vary in significance and scope; it could be like a startup project spaceship, and organizing a sporting event at the local level. Why are companies increasingly organizing and planning their activities on the basis of projects? The fact is that this approach best suits the dynamic external environment, which requires modern organizations to have increased flexibility and the ability to quickly respond to any changes in the situation. Modern companies implement unusual and even truly unique production projects related to solving a huge variety of complex interrelated tasks, the implementation of which requires specific skills and qualifications. All this absolutely does not fit into standard production planning procedures that a company can use in its routine, everyday activities. What are the features of project planning?

Project planning process

In a typical project, work is performed by a dedicated project team whose members are assigned to work on the project temporarily. They all report to a project manager, who coordinates their work in collaboration with other departments and divisions. However, since any project is a temporary undertaking, the project team exists only until the tasks assigned to it are completed. The group is then disbanded, and its members are transferred to work on other projects, either they return to the departments where they work permanently, or they leave the company.

The planning process for any project, including production, includes a number of stages. It starts with clearly defining the project's goals. This stage mandatory because the manager and team members must clearly know what they must achieve by the time the project is completed. Then it is necessary to determine all the types of work to be performed within the project and the resources required for this. In other words, at this stage it is necessary to answer next question: What labor and materials will be required to complete this project? This stage is often associated with certain difficulties and requires a considerable amount of time, especially if the project is fundamentally new or even unique, i.e. when the company does not have any experience in implementing projects of this type.

After determining the types of work, it is necessary to determine the sequence of their implementation and the relationships between them. What should you do first? What jobs can be done at the same time? In this case, the person planning the production project can use any of the production planning tools described earlier: create a Gantt chart, a workload distribution chart, or a PERT network diagram.

Next, you should create a schedule for the project. The first step is to preliminarily estimate the completion time of each work, and on the basis of this assessment, a general project schedule is drawn up and the exact completion date is determined. After this, the project schedule is compared with previously established goals and the necessary changes and adjustments are made. If a project turns out to be too long to complete—which is inconsistent with the company's goals for the project—the manager can allocate additional resources to the most critical activities to speed up the overall project completion time.

With the advent of many different computer programs Working over the Internet, the procedure for planning and managing production projects has been greatly simplified. It should also be noted that often the company's suppliers and even its consumers take an active part in this activity.

Scenario planning

A scenario is a forecast of probable future developments of events, which is characterized by a certain sequence of these events. In this case, it is assessed how this or that development of events will affect the environment in which the company operates, the company itself, the actions of its competitors, etc. Different assumptions can lead to different conclusions. The purpose of such an analysis is not to try to predict the future, but to clarify the situation as much as possible and make it as definite as possible, “playing out” possible scenarios taking into account different initial conditions. Even the process of scenario writing forces company leaders to rethink and better understand the business environment because the activity forces them to view it from a perspective they may never otherwise have considered.

Although scenario planning is a very useful way to predict future events (which can be predicted in principle), it is clear that predicting random, arbitrary events is very difficult. For example, hardly anyone could have predicted such a rapid spread and incredible popularity of the Internet in recent decades. Similar events will undoubtedly occur in the future. And although they are extremely difficult to predict and respond to correctly, managers must strive to somehow protect their organizations from their consequences. Scenario planning serves this purpose, including in the production sector.

Production control

An important element The production plan within any business plan is a description of how the firm intends to control its production system, particularly its elements such as costs, purchasing, maintenance and quality.

Cost control

It is believed that American managers often treat cost control as a kind of corporate "crusade", which is undertaken from time to time and carried out under the leadership of the company's accounting department. It is accountants who set cost standards per unit of production, and managers must find an explanation for any deviation. Have the company's material costs increased? Maybe the labor force is not being used effectively enough? Perhaps, in order to reduce the volume of defects and waste, it is necessary to improve the skills of workers? However, now most experts are convinced that cost control should play a major role already at the stage of development and planning of an organization's production system and that all managers of the company, without exception, should be constantly engaged in this activity.

Currently, many organizations are actively using an approach to cost control based on the so-called cost centers. These are responsibility centers for which separate cost accounting is maintained, but which are not directly related to making a profit; the efficiency of such departments is determined based on the compliance of actual costs with the planned or standard volume.

Since all costs must be controlled at some organizational level, the company needs to clearly define at what level certain costs are controlled and require company managers to report on those costs that fall within their area of responsibility.

Control over procurement

In order to efficiently and effectively produce certain goods and provide services, the company must be constantly provided with all necessary resources, including materials. She needs to constantly monitor supply discipline, monitor the characteristics of goods, their quality, quantity, as well as prices offered by suppliers. Effective control over procurement not only ensures the availability of all the resources the company needs in the required volume, but their proper quality, as well as reliable, long-term and mutually beneficial relationships with suppliers. All these points must be reflected in production section business plan.

So what can a company do to make it easier and more efficient to control its inputs? Firstly, collect the most complete and accurate information about the dates and conditions of deliveries. Secondly, collect data on the quality of supplies and how well they correspond to the company's production processes. And thirdly, obtain data on suppliers’ prices, in particular, on the correspondence of actual prices to the prices that were indicated by them when placing the order.

All this information is used to compile ratings and identify unreliable suppliers, which allows the firm to select the best partners in the future and monitor various trends. Thus, suppliers can be assessed, for example, by the speed of their response to changes in demand, the quality of service, the level of reliability and competitiveness. We'll talk more about relationships with suppliers in the next section.

Control over suppliers

Modern manufacturers strive to form strong partnerships with suppliers. Instead of dealing with dozens of sellers who will certainly compete with each other for the customer, manufacturing firms today often choose two or three suppliers and establish close relationships with them, ultimately increasing both the quality of the products supplied and the efficiency of this cooperation.

Some firms send their design engineers and other specialists to their suppliers to solve all sorts of technical problems; others regularly send teams of inspectors to suppliers' plants to evaluate various aspects of their operations, including delivery methods, manufacturing process features, statistical controls used by suppliers to identify defects and their causes, etc. In other words, today companies in all countries are doing what Japan has traditionally always done - they are striving to establish long-term relationships with their suppliers. Suppliers who partner with a manufacturing company are able to provide higher quality resources and reduce defect rates and costs. If any problems arise with suppliers, open and direct communication channels allow them to be resolved quickly and efficiently.

Inventory control

To effectively and efficiently achieve its goals, any company must control the replenishment of its inventory. For this purpose, a re-order system is used when a certain stock level is reached.

This type of reordering system is used to minimize the ongoing costs associated with holding inventory and ensure the appropriate level of customer service (since it reduces the likelihood that at some point the desired product will not be in stock).

Using various statistical procedures, companies typically set the reorder point at a level that ensures that they have enough inventory to last between reorder placement and fulfillment. At the same time, they usually retain some additional “safety” reserve, which allows them to avoid complete depletion of the reserve in unforeseen circumstances. This so-called “buffer” or reserve serves as a reliable protection for the company if, in the period between a re-order and its fulfillment, a greater than usual need for a product or material arises, or if replenishment of stock is delayed for unforeseen reasons.

One of the simplest but very effective ways to use a reorder system once a certain inventory level is reached is to store tracked inventory in two different containers. In this case, goods or materials are taken from one container until it is empty. At this point, a reorder is made, and until it is completed, the products are taken from the second container. If the company has correctly determined the demand, then the reordered goods will arrive before the second container is empty, and there will be no delay.

The second modern and already very common method of reordering upon reaching a certain stock level is based on computer control. In this case, all sales are automatically recorded by the central computer, which is programmed to initiate a new order procedure when the stock in the warehouse reaches a certain critical level. Currently, many retail stores actively use such systems. Another fairly common system is the re-order system after a certain time interval. In this case, inventory control is exercised solely on the basis of a clearly defined time factor.

Maintenance control

The production section of the business plan should also indicate how the firm will monitor the effectiveness of maintenance. In order to quickly and efficiently provide consumers with goods or services, a company must create a production system that guarantees the most efficient use of equipment and its minimum downtime. Therefore, managers, among other things, must constantly monitor the quality of maintenance. The significance and importance of this activity largely depends on the production technologies used by the company. For example, even a minor glitch on a standard assembly line can stop hundreds of workers from working.

There are three main types of maintenance in manufacturing organizations. Preventative repairs are carried out before an accident. Restorative repair requires complete or partial replacement of the mechanism or its repair on site immediately after a breakdown. Conditional repair is a major repair or replacement of parts based on the results of a previously conducted technical inspection.

It should be noted that the need for control over maintenance must be taken into account already at the design stage of the equipment. So, if a failure or downtime of equipment leads to serious problems in the production system or is too expensive for the company, then it can increase the reliability of mechanisms, machines and other tools by incorporating additional characteristics into the equipment design. In computer systems, for example, redundant, backup subsystems are often introduced for this purpose. In addition, equipment can be initially designed in such a way as to simplify and make its subsequent maintenance cheaper. It should be borne in mind that the fewer components included in the equipment, the less often breakdowns and malfunctions occur. In addition, it is advisable to place parts that often fail in an easily accessible place or even mount them in separate units, which can be quickly removed and replaced if they break down.

Quality control

Quality control is a comprehensive, consumer-oriented program designed to continually improve the quality of a company's production processes and the goods or services it produces. The production section of the business plan should indicate how the company will carry out quality control.

This activity involves constantly monitoring the quality of products to ensure that they consistently meet the established standard. Quality control must be performed several times, beginning with the initial entry of inputs into the firm's production system. And this activity must continue throughout the entire production process and end with the control of finished goods or services at the exit of the production system. This procedure also provides for quality assessment at intermediate stages of the transformation process; It is clear that the sooner you identify a defect, or an ineffective or unnecessary element of the production process, the lower your costs will be to correct the situation.

Before implementing quality control, managers must ask themselves whether 100% of the goods (or services) produced need to be inspected or whether samples can be done. The first test option is appropriate if the cost of ongoing assessment is very low or if the consequences of statistical error are extremely serious (for example, if the company produces complex medical equipment). Statistical sampling is less expensive and is sometimes the only cost-effective quality control option.

Sampling control during acceptance consists of evaluating materials or goods purchased or manufactured by the company; it is a form of feedforward or feedback control. In this case, a certain sample is made, after which the decision as to whether to accept or reject the entire batch is made based on the results of the analysis of this sample, based on a risk assessment.

Process control is a procedure in which sampling is carried out during the process of converting inputs into goods or services, thereby determining whether the production process itself is out of control. With this type of control, statistical tests are often used to determine at different stages of the production process the extent to which deviations have exceeded the acceptable level of quality. Since no production process can be considered perfect and some minor deviations are simply inevitable, such tests allow the company to identify serious problems, i.e. quality problems that the company should respond to immediately.

Production Control Tools

It is obvious that the success of any organization is largely determined by its ability to efficiently and effectively produce goods or provide services. This ability can be assessed using a number of production control methods.

Production control, as a rule, consists of monitoring the production activities of an organization or a separate department in order to ensure its compliance with a previously drawn up schedule. Production control is used to determine the ability of suppliers to provide the appropriate quality and quantity of supplies at the lowest cost, and to monitor the quality of products to ensure they meet established standards and check the condition of production equipment. We've already discussed the basic aspects of controlling manufacturing operations, but two of the most important manufacturing control tools—the TQM control schedule and the economic order quantity model—deserve a closer look.

Based on materials:

1. Business planning in an open economy: a textbook for students of higher educational institutions / V.P. Galenko, G.P. Samarina, O.A. Strakhov. - 2nd ed., erased. - M.: IC "Academy", 2007. - 288 p.

A production plan is a special section of business documentation containing a detailed description of technological processes. It is presented to investors for consideration. This paragraph should be given special attention, since it reflects the skills of the entrepreneur and assesses the prospects of the business. Therefore, if a fairly serious event is planned with the involvement of third-party assets, the production plan in the business plan must be carried out professionally.

The calculations that accompany the production plan must be based on the projected volumes of sales and supply of raw materials. The most obvious way would be to back up the information with a generated calendar (production table) for the supply of inventories, storage and shipment of finished products to retail or the end consumer.

The content of the production plan is based on the chain of transformations of input resources into the result of the technological process. The capacities used at the enterprise will include personnel, investments, equipment, and raw materials. At the output, the organization, according to the production project, must produce goods or services that will be in demand in the market and of interest to the consumer.

Features of drawing up a production plan

After the leading sections of the production plan have been outlined, it is necessary to determine and predict the indicators used to justify professional calculations. Using a standard business example, the following parameters are clarified:

Cost of utilities. Almost any business production requires the use of electrical networks, gas, water consumption and sewerage. When determining the production plan, the costs of services of specialized companies are taken into account by month, quarter, and year;
Before drawing up a production plan for a business plan, it is important to determine the level of payment costs wages to the staff. It is quite possible that this will be the largest expense item in the first year of operation;
In the technological plan of a business, it is important to include supply. For certain categories of production, different formulas for cost and derivation of the ratio to sales can be used. The classic proportion of production in business is to calculate profitability 1:2. That is, if the cost of executing a unit of goods is 1 ruble, it should ultimately cost at least 2.

In addition to the costs included in business planning, the company's revenue is also taken into account. These include profit margins, efficiency in attracting qualified talent, and return on investment. Here it will be important to reflect the impact of production costs on the business.

Classification of production plans

Before you start working on a paragraph, you need to decide on the type of final result. This may be an aggregate section of the production business plan, a leading schedule of work performed and a supply plan. Depending on the frequency of work, they can be short-term (up to 2 years), medium-term (up to 5 years) and long-term (10 years and longer). When planning the creation or expansion of a large company, it is recommended to work out all types of production process plans. This will best reflect the picture of profitability.

Contents of the “production plan” section

The structure of the descriptive part of the technological process is inextricably linked with the expenditure of investments and the further distribution of finances into own working capital. Taking into account the features of the production plan, the following structure is used when drawing up project documentation:

Description of the main production technology that is used to manufacture the target product according to plan. This part of the project describes in detail all stages of the technological process - from the purchase of raw materials to sale to the consumer. If the workflow planning is based on a unique manufacturing method, the costs and time for patent approval should be included;
Description of the algorithm for purchasing raw materials, leading suppliers, and the cost of inventories. It would be advisable to include in the characteristics of the production plan the organization of transportation, storage and delivery to the production line, as well as methods for recycling waste raw materials;
Description of the premises, territories, land plots involved. In conditions of limited resources for opening an individual enterprise, it is advisable to attract capacities and transport on a lease basis.

The production part of the business plan contains the procedure for supplying energy resources or a plan for modernizing existing utility networks

This section should also include costing rules for determining the cost of finished products.

It is important to take into account that the technical and economic indicators of the business plan include the fixed and variable costs of the enterprise.

Production resources and sales program

The standard classification of technical supply allows you to most accurately determine sources of consumption in order to justify production volumes in a business. In most cases, project documentation developers adhere to current standards. What applies to the resources described in the production and sales program:

Material supply – working capital, capital, land and energy supply;
Intangible resources. The production plan of the enterprise according to the model includes a description of patents, copyrights, brands and software used;
Personnel are presented as a key resource in any business idea to fulfill the current and future objectives of the enterprise;
The business plan should reflect the calculation of the need for labor resources, including the load on the factor of entrepreneurial ability and the administrative apparatus;
In the central section of the production plan, funds from various sources of origin are taken into account. This could be the money of the founders, the current assets of the enterprise, or attracted investments. Material factors of production have a direct impact on company processes. If they are insufficient, there is an increased risk of supply shortages or the inability to ensure the viability of other resources.

The implementation program includes economic calculations of profitability, quality indicators of fixed assets, the amount of equipment depreciation and other figures.

Justification of the premises

The location (location) of concentration of production capacity must at least correspond to the specialization of the organization in the chosen area. Along with the choice of equipment and technology, the space used will be of particular importance. As a business location, buildings suitable for functionality (idle factories with similar characteristics) can be selected or a project for the construction of a new factory can be drawn up.

This should include calculations for storage facilities, boxes and other types of premises that will be used in business activities. The documentation should also take into account existing utility networks and their suitability or the installation of new communications.

Selection of transport

Sample business plans often contain calculations for the supply of supplies or the distribution of finished products. A vehicle fleet is not always profitable to maintain by a non-core company. Auxiliary transport of universal use can play an important role in the development of business in production. Used cars (for example, a gazelle) are perfect for meeting current business needs. Having your own car will allow you to save on carrier services, at least at first.

Organizational plan for a business related to large volumes production will require the purchase of a fleet of vehicles. This could be special equipment or a shipment order. In the early stages of development, it is possible to attract private carriers, for example, for one-time shipments. Engaging services on such terms will allow you to save about 30-40 percent of the budget on transportation.

Human Resources and Personnel Attraction

Before defining the main technological processes, it is important to plan personnel reserves. In the harsh realities of business, managers of young enterprises often resort to outsourcing services. This method of recruiting allows you to optimize the financial burden on the budget and adjust the development strategy until permanently working professionals are found to fill regular positions. Outsourcing is one of the ready-made examples acquisition, when the enterprise receives uninterrupted resources on contractual terms.

In the case of recruiting workers, it will be necessary to provide for training time and costs in the overall production plan. Depending on the direction of the company’s activity, it will be necessary to draw up a horizon for reaching the required percentage of qualified specialists (critical for self-regulatory organizations and enterprises implementing a quality management system).

Environmental Safety

For a modern enterprise, environmental safety is not just respect for nature. Today this is a whole complex of measures for organizing storage, using raw materials processing with subsequent categorization. The concept of environmental safety by definition includes research in the field of impact on the natural environment. Without obtaining special conclusions from supervisory authorities, it will not even be possible to start production. The plan includes the position of a technospheric safety engineer, the cost of one-time services from environmental agencies, and various fees and charges.

Cost forecast

When developing a production plan, it is extremely important to predict the costs of the enterprise. It is unlikely that the administration will get anything for free. Equipment, machinery, vehicles and other facilities can be purchased at the expense of investors or leased on the owner's terms. Salaries cannot be delayed, so wages will also be included in expenses. You will need to plan for both overhead and unforeseen expenses. To keep things from looking gloomy, a revenue forecast is included in the draft production plan. The difference between the planned indicators will be the cost forecast.

While waiting for the business to launch, managers face a Herculean task. In the course of cooperation with capital owners, it will be necessary to report not only at the stage of receiving investments, but also during the development of areas. Therefore, the attitude of the co-founders directly depends on the quality of the business plan, especially since financing can be organized in tranches.

A document that gives the project a detailed justification, as well as the opportunity to evaluate it comprehensively decisions made and planned activities as highly effective and allowing to answer positively the question of whether the project is worth investing money in - a production plan. The business plan should reflect almost all the actions that will be needed to set up production.

Functions

Firstly, you need to show that the service or product will definitely find a consumer, calculate the capacity of the sales market and draw up a long-term plan for its development. Secondly, you need to accurately estimate the costs that will be necessary in the manufacture and sale of products or the provision of services or work on the market. Thirdly, it is necessary to determine the profitability of production in the future, showing all its effectiveness for the investor (enterprise), for the state, regional and local budget. And a production plan will help the entrepreneur with this. The business plan also contains its main functions.

1. It must be a tool through which an entrepreneur evaluates the actual results of a certain period of activity.

2. In developing the concept of promising business, a production plan is also used. The business plan has all the tools to attract investment.

3. The enterprise strategy is also implemented with its help.

In the planning process, the most important stage is the production plan. The business plan should contain everything necessary both for planning within the company and for justifying subsidizing the enterprise from external sources, that is, money is received for a specific project - these are bank loans, budget allocations, equity participation of other enterprises for the implementation of the project.

That is why it is necessary to reflect absolutely all aspects of commercial and production activities and the financial results of the enterprise. The structure of this document is subject to unification according to the standards that any production plan provides. A business plan (an example will be given below) must contain certain sections. For clarity, let's take a standard sample.

Summary

The first section is an overview. This is a summary. It is the most important because in brief reflects the whole essence of this project. Almost all success depends on the content of the first section, on what exactly the production plan is in the business plan. There are many examples of refusal to cooperate after looking at an entrepreneur’s resume. The first section should arouse interest in the enterprise among potential investors.

The following points must be included in your resume. First of all, the goal of this project and then the most attractive points and positive aspects of the business idea that is being proposed are also briefly outlined (here you need to select facts from all other sections; a business plan for a manufacturing enterprise is always drawn up like this). Next, indicate the volume of attracted credit resources and investments with the main financial indicators that can characterize the effectiveness of this project. Be sure to indicate the expected time frame for repayment of borrowed funds. List the dates and numbers of certificates and patents received. It is recommended to end the summary with facts that confirm the economic and legal guarantees and reliability of the future enterprise.

Description of the enterprise

The second section is devoted detailed description planned enterprise. This is not yet the production section of the business plan, but many points from there have been transferred here in a condensed form - they seem to anticipate the gradual disclosure of the attractiveness of this object.

1. Profile: service sector, or trade, or production, the nature of the company and its main activities.

2. Business and stage of its development.

3. The main goals of creating an enterprise, all its organizational and legal norms.

4. Offers with which the company will reach its customers.

5. If the enterprise already exists, then you need to present all the main economic and technical indicators for the past 5 years.

6. Current geographical boundaries of activity and in the future.

7. Detailed coverage of competitiveness indicators: all services, goods of similar enterprises for specific periods and markets.

8. Explain how this enterprise differs from all others of this profile.

Description of activity

In the third section, the business plan for production activities contains a detailed physical description of services or products with the possibilities of their use. It is necessary to indicate all the most attractive aspects of the products and services that will be offered, to indicate the degree of their novelty.

It is very important to indicate the degree of readiness of the proposed services or products to enter the markets (here information from those consumers or experts who have become familiar with the products and can give written favorable feedback about them would be very appropriate).

Marketing strategy

In the fourth section, the production plan of a business project should contain a detailed analysis of the market; it is also necessary to outline your own marketing strategy. The purpose of such an analysis is to explain how the future business intends to influence the existing market, how it will react to the situation developing there so that the sale of goods or services is ensured. This is primarily a determination of capacity and demand, analysis of competition and many other influencing factors. As a result of market research, sales volume forecasts should be given. Everything related to sales promotion, pricing, product promotion, that is, the entire sales strategy, including advertising, is relevant here.

There are many components to a marketing strategy. This is the result of market segmentation and new technologies for goods and services of the enterprise and price forecasts, market coverage, assortment development, resource strategy, right choice ways and methods of product distribution, promotion of its sales, advertising strategy and development prospects for the enterprise.

Production plan

In addition, the financial section should present the company’s operating budget, its insurance and risk management, a forecast for operations with securities, and indicate the main indicators of the project for its effectiveness, and this includes payback periods, net present value, and profitability.

Risks

The ninth section is devoted to an assessment of the risks most likely for a given project, and, possibly, a more accurate forecast of what these risks may result in in the event of force majeure.

Answers should be given here to minimize risks and possible losses because of them. Usually in a business plan they are divided into two parts: the first describes organizational measures to prevent any risks, and the second sets out a program of self-insurance or external insurance.

Second option

There are examples of drawing up a business plan with a more expanded eighth and additional ninth and tenth sections. Relatively speaking, we can say that it is simply somewhat expanded. It reflects monthly, quarterly and yearly changes in the dollar-ruble exchange rate, provides a list and tax rates, and outlines ruble inflation. Details are provided on the formation of capital through loans, issues of shares or own funds, as well as the procedure for repaying these loans and interest on them.

There are three main documents in the financial section: a profit and loss statement (the operating activities of the enterprise for each period), a financial flow plan and a balance sheet on the financial condition of the enterprise at the moment. Attached: expected loan repayment schedules with payment of interest, information indicating initial assumptions and changes in working capital and payment of taxes. Additionally, calculations of solvency, liquidity and projected project efficiency indicators are usually included.

A production plan is an integral part of any business plan, which should describe all production or other work processes of the company. Here it is necessary to consider all issues related to production premises, their location, equipment and personnel, and also pay attention to the planned involvement of subcontractors. It should be briefly explained how the system for producing goods (providing services) is organized and how production processes are controlled. Consideration must also be given to the location of production facilities and the placement of tools, equipment and work stations. This section should indicate delivery times and list the main suppliers; describes how quickly a firm can increase or decrease its output of goods or services. An important element of the production plan is also a description of the company's quality control requirements at all stages of the production process.

The main task of this section of the business plan is to determine and justify the company’s choice of a particular production process and equipment.

It should be noted that industry specialized design companies are involved in the preparation of this section of the business plan, which is understandable, since the choice of technology and method of organizing the production process largely determines the effectiveness of any production project.

Production system

Every organization has a production system that receives various inputs (personnel, technology, capital, equipment, materials, and information) and transforms them into goods or services (Figure 1).

Rice. 1. Production system

Production planning

Production plans are usually classified by scope (strategic and operational), time frame (short-term and long-term); nature (general and specific) and method of use (one-time and permanent) (Table 1).

Table 1. Types of production plans

If we talk about long-term strategic planning, then at this level decisions are made in four main areas: production capacity utilization (in what quantities will a product or service be provided), location of production facilities (where a product will be produced or a service provided), production process (what production methods and technologies will be used to produce a product or provide a service) and the placement of tools and equipment (how work centers and equipment will be located in enterprises). Having decided these strategic issues for himself, the developer must also draw up and include in the production plan of his business plan the following three documents: a general (aggregate) plan (what is the general production plan for all types of goods or services offered by the company), a master work schedule (how many units of each type of product or service the company will have to produce or provide over a certain period of time) and a plan for the company's need for material resources (what materials and in what quantity will the company need to fulfill the main work schedule). These plans are called tactical.

Planning of production capacity utilization

Let's assume that the ABC company decided to produce lawn mowers. Through extensive market research and market analysis, she determines that mid-range tools are in greatest demand among consumers. So the company knows what it should produce. Next, she needs to determine in what quantity to produce the product, i.e. how many lawn mowers of the selected model should be produced in a certain period of time. It is on this decision that other issues related to planning the utilization of production capacity will depend.

Planning of production capacity utilization is based on forecasts of future demand, which are transformed into requirements for production volumes. For example, if the ABC company produces lawn mowers of only one specific model, it plans to sell them for an average of 3,000 rubles. per piece and assumes that during the first year it will be able to achieve a sales volume of 3 million rubles, which means that it will need production capacity that allows it to produce 1000 mowers per year (3000 x 1000 = 3,000,000 rubles). This determines the physical requirements for the utilization of production capacity. It is clear that if the ABC company produces several models of lawn mowers and some other equipment, then in this case the calculations will be more complex.

If a company has been in business for a long time, the commercial forecast of future demand is compared with its actual production capacity, which allows it to determine whether it will need additional capacity given such demand. It should be noted that planning capacity utilization is an activity that is carried out not only by manufacturing firms, but also by service companies. Thus, administrators of educational institutions similarly determine the number of places required to provide educational process for the projected number of students, and network managers fast food— how many hamburgers they need to cook during rush hour.

Once the business forecast for future demand is translated into capacity utilization requirements, the company begins to develop other plans to ensure it can meet those specific requirements. However, both the company and the people to whom it will present its business plan should remember that plans for the utilization of production capacity may subsequently change, both upward and downward. In the long run, these changes are quite significant because the firm acquires new equipment or sells its existing production capacity, but in the short run the modifications should not be significant. The company may introduce additional work shifts, change the amount of overtime work, shorten the duration of some work shifts, temporarily suspend production, or invite third parties as subcontractors to perform certain operations. In addition, if a company's product can be stored for a long time and especially if it is seasonal (such as ABC lawn mowers), during periods of low demand it can create additional inventories and sell them during periods of peak sales, i.e. at a time when its existing production facilities are not able to fully satisfy the demand for its goods.

Planning for the location of production facilities

If a company plans to expand its production capacity in the future, in the section of the business plan we are describing, it must indicate what buildings and structures it will need to ensure normal work processes. This activity is called capacity planning. The location of any company's buildings and structures is primarily determined by which factors most strongly influence its overall production and distribution costs. These are factors such as the availability of qualified personnel, labor costs, electricity costs, proximity of suppliers and consumers, etc. It should be noted that the importance and significance of these factors tend to vary depending on the business in which the company operates.

For example, many companies operating in the high technology sector (and primarily in need of large number qualified technical specialists for normal functioning), concentrated in large cities where there are universities and large research centers. On the other hand, many companies specializing in labor-intensive production locate their production facilities abroad, usually in countries with low level wages. For example, many software companies are actively setting up R&D centers in India, which has recently become famous for its specialists in this field, who can perform at least as high a productivity as their American and European counterparts, but at a significantly lower cost. . American tire manufacturers have traditionally built their plants in northern Ohio, allowing them to operate in close proximity to their main customers, the giant Detroit automakers. If we talk about service firms, then for them the decisive factor is usually the convenience of consumers, as a result of which most large shopping centers are located on large highways, and cafes and restaurants are located on busy city streets.

What factors will be most important for the ABC company from our example? Obviously, she will need qualified technical personnel who can design and manufacture lawn mowers. The location of consumers plays an equally important role in this case, which means that it is best for her to locate her enterprises near large agricultural centers. After selecting a region, the company will need to select a specific location and land plot.

Production process planning

During production process planning, a company determines exactly how its product or service will be produced. When designing a production process plan for inclusion in its business plan, a firm must carefully analyze and evaluate its existing production methods and technologies and select those that can most effectively achieve its specific production goals. When choosing any production process, both in the production and in the service sector, there are various options. For example, when starting out in the restaurant business, a company may choose between a quick service establishment; a fast food establishment with a limited menu; a company specializing in delivery ready meals or servicing motorists; she may choose an option such as a luxury restaurant offering gourmet dishes, etc. When planning its production process, a company must answer a number of key questions that will determine its final choice. What technology will she use: standard or customized? To what extent will its production process be automated? What is more important for a company: efficiency or flexibility of the production system?

For example, the ABC company may well choose such a common and effective method of organizing the production process as conveyor assembly, especially if it does not plan to produce lawn mowers according to special customer orders. But if a company intends to produce personalized products tailored to the specific wishes of consumers - which, admittedly, is becoming an increasingly common approach in both the manufacturing and service sectors - then it will, of course, need completely different technologies and production methods.

It should be noted that planning the production process is an extremely important and complex task. It is very difficult to determine the optimal combination of indicators such as cost levels, quality, labor efficiency, etc., since there is a close relationship between them. This means that even a small change in one component of the production process usually entails a number of changes in other components. It is precisely because of this complexity that the task of planning production processes is usually assigned to highly qualified specialists in the production field, whose activities are directly controlled by the top management of the company.

Planning equipment placement

The final strategic decision when drawing up the production section of a business plan is to evaluate and select the optimal placement of equipment, tools and work centers. This procedure is called equipment placement planning. The goal here is to physically arrange equipment, tools, work centers, and locations to maximize the efficiency of the production process while making it easy for staff—and often customers—to use.

Drawing up an equipment layout plan begins with assessing the physical space required for it. At this stage, the company must determine what production areas, rooms for storing tools and equipment, warehouses, workshops, employee rest rooms, offices, etc. she will need it to ensure the normal production process. Then, based on its existing production plans, the company can evaluate different equipment configuration and placement options in terms of its production efficiency. In this case, firms are helped to develop solutions by the most different methods and tools - from basic scaled plans and maps to complex computer programs that allow you to process huge volumes of variables and print different variants plans for the placement of machines, tools and other equipment.

There are three main approaches to the physical organization of the production process. In a production process design, all elements (work centers, equipment, departments) are arranged in production areas based on the similarity of the functions they perform. The second way to place equipment and workplaces is a linear (or flow) layout of equipment placement. In this case, the components of the production process are distributed in space in accordance with the successive stages of product production. The third approach is a layout based on a fixed position of the product. It is used in cases where, due to its impressive size or for some other reason, the product being manufactured must remain in one place, in a fixed position, throughout the entire production process, and materials, tools, equipment and personnel are delivered to it. Examples of such layouts include hangars in aircraft manufacturing or shipyards in shipbuilding.

Drawing up a general (aggregate) plan

Having decided on strategic issues, the company begins to make tactical decisions and, above all, to general, aggregate planning of its production activities and the production resources necessary for it. The result of this process is a document known as a general (aggregate) plan, which is drawn up for a certain period of time - usually one year.

General (aggregate) planning allows a company to include what is called the overall picture in its business plan. When drawing up a general (aggregate) plan, based on forecasts of future commercial demand and planning the utilization of production capacity, the company determines inventory levels, production standards and the number of personnel (per month) that it will need over the next year. It should be remembered that the focus is on the overall production concept and not on specific details. Thus, during aggregate planning, entire categories of goods are considered, and not individual types. For example, the general plan of a company specializing in the production of paints and varnishes will indicate how many liters of facade paint it will need to produce over a certain period, but it will not specify what colors and packaging it will be produced in. Such plans are especially important for large manufacturing enterprises that produce a large range of products. In a small company that produces a single product (such as the ABC company from our example), the general plan will more closely resemble the main work schedule, except perhaps drawn up for a longer period (more on this in the next section). Thus, we can say that a correctly drawn up general (aggregate) plan reflects two main indicators of the company’s performance: the optimal production rate and the total number of personnel that the company will need in each specific period within the framework of this plan.

Drawing up a master work schedule

The main work schedule is drawn up on the basis of the general (aggregate) plan described above. We can say that this is a more detailed version of the aggregate plan. The main schedule indicates the quantity and type of each type of product produced by the company; how, when and where they will be manufactured the next day, on next week, next month; it also includes information about the required labor force and the firm's inventory requirements (that is, the totality of all inventories of the enterprise, including stocks of raw materials, components and semi-finished products, work in progress and finished goods).

First of all, the main work schedule is drawn up with the aim of disaggregating the general (aggregate) plan, i.e. break it down into separate, detailed operating plans for each product or service the company offers. Subsequently, all these individual plans are combined into a common master work schedule.

Material requirements planning

Having determined exactly what types of goods or services it will produce or provide, the company must analyze each of them and determine as accurately as possible its needs for raw materials, materials, components, etc. Materials requirements planning is an advanced planning concept that includes elements of modeling and the ability to create various scenarios for the development of events depending on the situation. Using this concept, a firm can accurately schedule its future requirements for materials needed to produce its final products, expressing them in specific numerical terms. Thanks to the advent of sophisticated computer programs, modern managers have the opportunity to analyze in detail all specifications and specifications of their goods and services, as well as accurately identify all materials, raw materials and components necessary for their production or provision. This critical information, coupled with computerized inventory data, allows managers to determine the quantity of each part in stock and therefore calculate how long the firm is stocked with inventory. Once the company has determined the lead time (that is, the time between confirmation of an order for materials and receipt of those materials) and the requirements for buffer (reserve) stocks (we will talk about these later), all this data is entered into the computer, and they become the basis for providing the company with the material resources it needs. Thus, thanks to the materials requirements planning system, the company has fairly reliable guarantees that all the materials it needs will be available and available. the right quantity when they are needed in the production process.

The latest MRP software offers incredible capabilities when it comes to plant planning and scheduling. Thanks to it, managers, when making decisions about the allocation of company resources, can take into account various limiting and situational factors, such as equipment downtime, lack of labor resources, bottlenecks in the production process, shortages of important raw materials, etc.

Production Planning Tools

Next, we consider tools for drawing up production plans, thanks to which a company can significantly increase the efficiency of this process and present in its business plan a truly clear and complete plan for its future production activities.

If you observe the work of lower-level managers for several days, you can be sure that they are constantly discussing what work needs to be done by their subordinates, in what order, who exactly will perform what operations and by what time this or that work should be completed . All this activity is united under one common name - time-based (scheduling) planning. Below we look at three main tools that managers use in this process: the Gantt chart, the workload chart, and the PERT network analysis.

Gantt chart

This tool, the Gantt chart, was created in the early 1900s by Henry Gantt, an associate of the famous theorist and practitioner in the field of scientific management Frederick Taylor. Essentially, a Gantt chart is a histogram on which time periods are plotted horizontally, and all types of work activities for which, in fact, the schedule is drawn up vertically. The columns display the planned and actual results of the production process over a certain period of time. Thus, the Gantt chart clearly displays which production tasks should be completed and when, and allows you to compare the planned result with the actual completion of work. This is a fairly simple, but convenient and useful tool with which managers can fairly accurately determine what still needs to be done to complete a particular work task or project, and evaluate whether it is being completed ahead of schedule, on schedule, or behind schedule. In the latter case, they should take steps to correct the situation.

Load distribution scheme

The load distribution scheme is nothing more than a slightly modified Gantt chart. Unlike the Gantt chart, it does not indicate types of work vertically, but departments or specific organizational resources. Thanks to this tool, firms can more effectively plan and control the use of the organization's production capacity.

Network analysis PERT

It should be noted, however, that the Gantt chart and workload distribution chart are useful if you need to monitor the execution of a relatively small number of different types works, and not interrelated with each other. If a company needs to plan a large-scale project—for example, aimed at completely reorganizing one of its divisions, reducing costs, or developing a new type of product or service—then it will need to coordinate the actions of employees from a variety of departments and services. Sometimes these projects involve coordinating hundreds or even thousands of activities, many of which must be completed simultaneously, while others can only be started after the previous ones are completed. It is clear, for example, that during the construction of a building it is impossible to put on a roof without erecting walls. In such situations, managers use another tool known as PERT (Program Evaluation and Review Technique) network analysis.

A PERT network analysis is a diagram that displays the sequence of all the activities that must be performed as part of a project, as well as the time and money costs for each of them. This method was developed in the late 1950s to coordinate work on the Polaris submarine, a project that involved more than three thousand different contractors. Through PERT network analysis, the project manager can determine what exactly needs to be done in the project and what events will depend on each other, as well as identify potential project problems. In addition, using PERT, he can easily compare how certain alternative actions could affect the schedule and costs of the project. As a result, thanks to the PERT network analysis, the manager, if necessary, can redistribute the resources available to his company, thereby preventing the project from deviating from the planned schedule.

To build a PERT network diagram, you need to know and understand four important concepts: events, activity types, slump period, and critical path. Events are endpoints that separate major activities and indicate the completion of one and the beginning of the next. Activities are the time or resources required to move from one event to another. A slump period is a period of time during which a particular activity can be slowed down without slowing down the entire project. The critical path is the longest or most time-consuming sequence of events and activities in the PERT network. Any delay in completing events on the critical path will invariably delay the completion of the project as a whole. In other words, activities on the critical path have a zero decay period.

To create a PERT network diagram, a manager needs to identify all the major activities needed to complete an upcoming project, arrange them in the order they should be completed, and estimate how much time it will take to complete each one. This process can be represented in five stages.

1. Identify all significant activities that need to be performed to complete the project. During each of these types of work, certain events occur or certain results are achieved.

2. Determine the order of events that occurred in the previous stage.

3. Draw up a flow diagram of work types from start to finish, identifying separately each type of work and its relationship with other types of work. Events on the diagram are indicated by circles, and jobs by arrows; the result is a clear block diagram, which is called a PERT network (Fig. 2).

4. Estimate the time required to complete each type of work. This operation is performed by using a so-called weighted average. To obtain this indicator, take an optimistic estimate of time, t 0, i.e. assessment of the duration of a particular type of work under ideal conditions; the most probable estimate of time, t m, i.e. assessment of the duration of this type of work under normal conditions; and a pessimistic estimate of time, t p , i.e. assessment of the duration of work under the worst possible conditions. As a result, we have the following formula for calculating the expected time t e:

6. Using a network diagram that estimates the duration of each type of work within the project, plan the start and end dates of each type of work and the project as a whole.

Rice. 2. Example of a PERT network diagram

As we said above, a tool such as PERT network analysis is typically used to plan very complex projects consisting of hundreds or even thousands of events. Therefore, calculations in this case are performed using computer technology using special software.

Production planning methods

Modern managers have to solve a very difficult task - planning the activities of their organizations in a complex and extremely dynamic external environment. To solve it, project management and scenario-based planning have proven themselves well. Both methods pursue one primary goal - to increase the company's flexibility, without which it is impossible to succeed in today's ever-changing business world.

Project management

Today, many manufacturing firms operate on a project basis. A project is a series of interrelated works that has clear starting and ending points. Projects vary in significance and scope; This could range from a spaceship launch project to a local sporting event. Why are companies increasingly organizing and planning their activities on the basis of projects? The fact is that this approach best suits the dynamic external environment, which requires modern organizations to have increased flexibility and the ability to quickly respond to any changes in the situation. Modern companies implement unusual and even truly unique production projects related to solving a huge variety of complex interrelated tasks, the implementation of which requires specific skills and qualifications. All this absolutely does not fit into standard production planning procedures that a company can use in its routine, everyday activities. What are the features of project planning?

Project planning process

The planning process for any project, including production, includes a number of stages. It starts with clearly defining the project's goals. This stage is mandatory because the manager and team members must clearly know what they must achieve by the time the project is completed. Then it is necessary to determine all the types of work to be performed within the project and the resources required for this. In other words, at this stage it is necessary to answer the following question: what labor and materials will be required to implement this project? This stage is often associated with certain difficulties and requires a considerable amount of time, especially if the project is fundamentally new or even unique, i.e. when the company does not have any experience in implementing projects of this type.

With the advent of many different computer programs running on the Internet, the procedure for planning and managing production projects has become significantly simplified. It should also be noted that often the company's suppliers and even its consumers take an active part in this activity.

Scenario planning

Production control

An important element of the production plan within any business plan is a description of how the firm intends to control its production system, particularly its elements such as costs, purchasing, maintenance and quality.

Cost control

Control over procurement

In order to efficiently and effectively produce certain goods and provide services, the company must be constantly provided with all the necessary resources, including materials. She needs to constantly monitor supply discipline, monitor the characteristics of goods, their quality, quantity, as well as prices offered by suppliers. Effective control over procurement not only ensures the availability of all the resources the company needs in the required volume, but their proper quality, as well as reliable, long-term and mutually beneficial relationships with suppliers. All these points should be reflected in the production section of the business plan.

Control over suppliers

Inventory control

To effectively and efficiently achieve its goals, any company must control the replenishment of its inventory. For this purpose, a re-order system is used when a certain stock level is reached.

Maintenance control

Quality control

Process control is a procedure in which sampling is carried out during the process of converting inputs into goods or services, thereby determining whether the production process itself is out of control. With this type of control, statistical tests are often used to determine at different stages of the production process the extent to which deviations have exceeded the acceptable level of quality. Since no production process can be considered perfect and some minor deviations are simply inevitable, such tests allow the company to identify serious problems in time, i.e. quality problems that the company should respond to immediately.

Production Control Tools

Production control, as a rule, consists of monitoring the production activities of an organization or a separate department in order to ensure its compliance with a previously drawn up schedule. Production control is used to determine the ability of suppliers to provide the appropriate quality and quantity of supplies at the lowest cost, and to monitor the quality of products to ensure they meet established standards and check the condition of production equipment. We've already discussed the basic aspects of controlling manufacturing operations, but two critical manufacturing control tools—the TQM control schedule and the economic order quantity model—deserve more attention.

TQM control charts

It should be remembered that effective quality control, which we discussed above, is aimed not only at the production quality goods or providing quality services. To ensure the high quality of both the products themselves and the processes by which they are produced, a company must control all aspects of its production system. Modern firms accomplish this task thanks to a tool known as the TQM control chart.

The TQM control chart is an effective production control tool. Essentially, it is a graph that indicates statistically determined upper and lower control limits and displays the measurement results for the reporting period. Control charts clearly show whether a production process has exceeded its pre-established control limits. As long as the results of checks at various stages of the production process are within a certain acceptable range, the system is considered to be in control (Figure 3). If the measurement results fall outside the established limits, then the deviations are considered unacceptable. Continuous quality improvement efforts should, over time, result in a narrower range between the upper and lower control limits as they eliminate the most common causes of deviation.

Rice. 3. Example of a control chart

When drawing up such a schedule, it is necessary first of all to take into account that in each production process there can be two sources of deviations. The first of these is unpredictability, due to which corresponding deviations may occur. Such deviations are possible in any process, and it is impossible to control them without fundamental changes to the process itself. Another source is non-random circumstances. Such deviations can be identified and are subject to control. It is clear that control charts are used to identify precisely such causes of deviations.

Control charts are created using some basic statistical concepts, including the well-known law normal distribution(it states that deviations tend to be distributed in a bell-shaped curve), and standard deviation (a measure of variability in a group of numerical data). When drawing up a control chart, the upper and lower limits are determined by the degree of deviation that is considered acceptable. According to the law of normal distribution, about 68% of the set of values are in the range from +1 to -1 from the standard deviation. (As the sample size increases, the sampling distribution becomes closer to normal.) In this case, 95% of the values lie in the range from +2 to -2 from the standard deviation. In the process of monitoring manufacturing operations, limits are usually set in the range of three standard deviations; this means that 97.5% of the values should be within the reference range (Fig. 4).

Rice. 4. Example of a control chart with a control range of three standard deviations

If the sample mean is outside the control range, i.e. is above its upper limit or below its lower limit, this means that the production process appears to be out of control and the company needs to do everything possible to identify the causes of the problem.

Model EOQ

We have already said that control over a firm's inventory is the most important aspect of production control. Firms' investments in these inventories are typically significant; Therefore, each organization strives to determine as accurately as possible how much new goods and materials to order and how often this should be done. The so-called EOQ model helps them with this.

The economic order quantity (EOQ) model is designed to determine the quantity of goods that should be ordered to satisfy forecast demand and minimize the cost of storing and purchasing inventory.

Using the EOQ model, two types of costs are minimized: order fulfillment and operating costs. As the volume of orders grows, the average amount of inventory increases, and the current costs of maintaining them also increase accordingly. However, placing larger orders means fewer orders and therefore lower fulfillment costs. The lowest total costs and, accordingly, the most economical order size are observed at the bottom point of the total costs curve. This point at which order fulfillment costs and operating costs are equal is called the point of most economic order sizing. To calculate this indicator, the following data is needed: the forecasted need for inventories for a certain future period(D); costs of placing one order (OS); costs or purchase price (V) and the ongoing costs associated with storing and processing the entire volume of inventory, as a percentage (CC). Having all this data, you can use the standard EOQ formula:

It should be remembered, however, that the use of the EOQ model assumes that the demand and lead time of the order are precisely known and constant. Otherwise it should not be used. For example, it is generally not applicable to determining order quantities for parts used in the production process, since they tend to come from the warehouse in large and uneven quantities. But does this mean that the EOQ model is useless for manufacturing firms? Not at all. It can be used to determine optimal size costs and identifying the need to change the order batch size. Although, it should be recognized that more complex models are used to determine batch sizes in conditions of variable needs and in other non-standard situations.

Modern aspects of production

When preparing the production section of a business plan, it is important to remember the modern realities of the production sector. Today, companies face many daunting challenges to improve productivity. They should strive to make the most of the benefits of new technologies, implement the described TQM concept; certify your products by obtaining ISO 9000 certification; constantly reduce inventory; establish partnerships with suppliers; achieve competitive advantage through flexibility and quick response to changes in demand, etc. Therefore, the company should reflect in its business plan how all these tasks will be accomplished.

Technologies

Increasing competition in most markets is forcing manufacturers to provide consumers with increasingly high-quality products at increasingly lower prices, while significantly reducing their time to market. Two factors contribute to accelerating the development of new types of products: the company's focus on reducing the development cycle and the efficiency of investments in new technologies.

One of the most effective tools with which modern manufacturers reduce the time to bring new products and services to market is complex production automation (Computer Integrated Manufacturing - CIM). CIM is the result of combining a company's strategic business and operational plan with computer software. It is based on computer-aided design (Computer-Aided Design - CAD) and computer-aided manufacturing (Computer-Aided Manufacturing - CAM) technologies. As a result of the emergence and widespread use of all kinds of automation tools, the old way of developing products has become hopelessly outdated. With the help of computer technology to visually display graphical objects, design engineers are designing new products much faster and more efficiently than before. Automated manufacturing is made possible by the use of computers to control the production process. Thus, numerically controlled machines can be programmed to produce new models literally in a matter of seconds.

According to experts, further improvement of CIM technology will ensure continuity of the entire production cycle. If each stage - from placing an order for raw materials to shipping finished products - is displayed in the form of numerical indicators and processed on a computer, companies will be able to respond very quickly to any market changes. They will be able to make hundreds of design changes in a matter of hours, quickly move to a wide variety of product variations, and produce them in very small batches. An organization that uses comprehensive production automation will not have to stop the assembly line and waste valuable time replacing pressing dies or other equipment to produce a new standard or non-standard product. One change in the computer program, which takes a few seconds, and the production process is completely rebuilt.

The most important condition for the effective operation of modern companies is the constant updating of technology, with the help of which the input stream of raw materials is transformed into a stream of finished products. Major technological changes usually involve the automation of production, which we discussed above, as well as the introduction of new equipment, tools or work techniques and computerization.

However, it appears that the most significant technological change in last years became universal computerization. Most organizations today have developed sophisticated information systems. For example, many retail chains use scanners connected to computers, with the help of which you can instantly obtain complete information about the product you are interested in (its price, code, etc.). And of course, these days you will not find a single office that does not use computer technology.

Implementation of TQM

Currently, many companies have already implemented the TQM philosophy. The idea of total quality management covers not only large but also small firms and enterprises. TQM (total quality management) is a concept that implies the participation of all employees of the company in improving the quality of products and services, optimizing production processes and management, etc.

Unfortunately, we must admit that not all efforts aimed at implementing TQM concepts were successful. Research in this area does not confirm that firms that have adopted TQM consistently operate at higher levels of efficiency than firms that have not. There are a number of factors that can significantly reduce the effectiveness of TQM. In particular, the researchers found that the success of some core TQM concepts—such as the use of teams, benchmarking, additional training, and employee empowerment—depended significantly on the company's ongoing performance.

From a technological perspective, the TQM concept focuses on developing flexible processes that support continuous quality improvement. The fact is that employees who have adopted the TQM philosophy are constantly looking for what can be improved or corrected, so work processes must be able to easily adapt to constant changes. In this regard, to successfully implement a TQM program, a company must constantly improve the qualifications of its personnel. It needs to provide its workers with opportunities to acquire and develop skills in areas such as problem solving, decision making, negotiation, statistical analysis and teamwork. Employees of these companies must be able to analyze and interpret data, and firms should provide their work teams with all the necessary information about the quality of their products, in particular about the rates of damage, defects, waste, etc. They should also inform staff about customer opinions and provide them with the information needed to create and manage control charts. And of course, the organization's structure must provide teams with sufficient authority to continually improve operations.

Reengineering

Reengineering is a term used to describe radical changes to all or part of a company's work processes in order to increase productivity and improve financial performance. In the process of reengineering, the structure, technology and personnel of the company undergo major changes, since in this case the methods of doing work in the organization are revised almost from scratch. During reengineering, managers constantly ask questions: “How else can this process be improved?” or “What is the best way to complete this work task faster and better?” etc.

Regardless of what caused the need for change - fluctuations in demand, a change in the economic situation or a change in the strategic direction of the organization - the person who decided to carry out reengineering must first evaluate the effectiveness of the staff and the quality of interaction between people within the organization. After a critical assessment of work processes, the company begins to look for ways to improve productivity and product quality: begin implementing a TQM program, change the organizational culture, or implement other changes. However, in any case, the essence of reengineering is that the company completely abandons the old ways of working and decides to radically change its work process.

You might be wondering: isn't the term "reengineering" synonymous with TQM? In no case! Although both of these processes are aimed at introducing change in the organization, their goals and means are completely different. The TQM program is based on the idea of continuous, incremental change. This means continually improving the performance of an organization that is generally doing well. In addition, TQM is implemented from the bottom up and the emphasis is on employee participation in decision making regarding the planning and implementation of the program. And reengineering is a radical change in the way an organization operates. This process involves fundamental changes and a complete overhaul of work practices. Reengineering activities are initiated by the firm's top management, but when the process is completed, virtually all employees typically gain greater authority in their jobs.

A characteristic feature of reengineering is that you have to start from scratch and rethink and rebuild the entire work scheme, i.e. structure of all work processes. Traditional, well-known ways and methods are immediately excluded. In other words, the company completely abandons incremental changes in the production system, since the ways and methods by which the company will produce goods or provide services are radically changed. Entirely new work processes and operations are invented and implemented. When reengineering, what was before should in no case even serve as a starting point, because reengineering is a radical, fundamental change in the very foundations of the organization. Despite the significant stress and increased uncertainty among staff that typically accompany the reengineering process, it can produce excellent results.

ISO Standards

To openly and clearly demonstrate their commitment to quality, modern organizations strive to achieve ISO certification. What is its essence? These are the quality management standards that companies around the world are guided by. They cover literally everything: from contract rules to product development and delivery. ISO standards are set International organization on standardization and are used as an international evaluation criterion for comparing firms operating in the global market. A company's certificate indicates that it has developed and implemented an effective quality management system.

Quality certificates today are received by small sales and consulting companies, software development firms, city public utilities, and even some financial and educational institutions.

However, it should be remembered that although the certificate provides the company with a lot of advantages and significantly strengthens its competitive position, the main goal of the company should be the process of improving the quality of its goods or services. In other words, obtaining a certificate should not be an end in itself; In pursuit of this, the company must create work processes and a production system that will allow all its employees to perform their jobs with consistency. high quality.

Reduction of inventories

As we have already said, a very significant part of the assets of most companies is its inventory. Firms that manage to significantly reduce their inventory levels—i.e. raw materials, semi-finished products and finished goods in the warehouse - can significantly reduce the cost of storing them and thus increase their productivity. How the company intends to solve this problem should also be reflected in the production section of the business plan.

Modern companies take this problem very seriously. In recent years, managers in all countries have been actively looking for ways to improve the efficiency of inventory management. Thus, during the input phase, they seek to improve the communication between internal production schedules and forecast consumer demand. Marketing managers are increasingly being asked to provide accurate and timely information about future sales volumes, which is then combined with specific data about the company's production systems to determine the optimal production volume to meet existing demand. Production resource planning systems are ideally suited to perform this function.

Today, companies around the world are actively experimenting with another technique, which has been successfully used in Japan for a long time and is called the Just-In-Time (JIT) system. Under this system, goods and materials arrive at the manufacturer exactly when they are needed in the production process, rather than being stored in a warehouse. The ultimate goal of implementing a JIT system is to completely eliminate raw material warehouses through precise coordination of the production and delivery processes. If such a system works effectively, it provides significant benefits to the manufacturer: its inventory is reduced, equipment set-up time is reduced, the cycle of product transformation processes is accelerated, production time is reduced, production space is freed up and often even the quality of the products is improved. Of course, in order to achieve all this, it is necessary to find suppliers who will deliver quality materials on time.

However, it should be taken into account that not every manufacturer can use the JIT system. Thus, for its implementation it is necessary that suppliers are located close to the buyer’s enterprises and supply materials without defects. This system also requires reliable transport links between suppliers and the manufacturer, effective methods acceptance, processing and distribution of materials, careful planning of the production process. If all these conditions are met, JIT will help to significantly reduce the company's warehouse costs.

Outsourcing and other types of partnerships with suppliers

The production section of the business plan should also indicate how the company intends to work with suppliers and improve the efficiency of this process. As already mentioned, one of the most important trends in the manufacturing sector recently has been a strong trend towards the formation of partnerships between manufacturers and suppliers. It should be noted that, among other things, this often involves outsourcing some of the work, where manufacturers, in an effort to reduce high labor costs, outsource the production of some parts and components to their suppliers, who can produce them at a lower cost. This relationship is called outsourcing.

Today, alliances between manufacturers and suppliers have become much closer and stronger. Suppliers are becoming increasingly involved in the product manufacturer's production process. Many operations that were previously the sole responsibility of manufacturers are now carried out by their main suppliers, i.e. Some of the work is transferred to third-party contractors. At the same time, manufacturers are increasingly playing the role of “conductors” and limit themselves to only coordinating the activities of different suppliers. According to experts, the trend towards strong and close partnerships between suppliers and manufacturers will continue in the future, as the latter are constantly looking for new sources of competitive advantage in the global market, and one of such sources is close relationships with suppliers.

Flexibility as a competitive advantage

In today's fast-paced business world, companies that cannot quickly adapt to change are doomed to failure. Because this capability comes from flexibility in the manufacturing process, many organizations are actively developing and implementing flexible manufacturing systems.

Modern factories often resemble scenes from a science fiction movie, in which remote-controlled carts transport workpieces to computerized machining centers. Robots automatically change the position of the workpieces, and the machine, manipulating hundreds of tools, turns the workpiece into a finished part. Every minute and a half, a finished product comes off the assembly line, slightly different from the previous ones. There are no workers or usual machines in the workshop. No costly downtime required to replace dies or tooling. One modern machine is capable of producing dozens and even hundreds of very different parts, producing them in any programmed order.

A unique feature of flexible manufacturing systems is the integration of computer-aided design, engineering design and manufacturing processes, allowing factories to produce small, custom runs at prices previously only possible with mass production.

As a result of the use of flexible production systems, economies of scale are being replaced by economies of breadth. Organizations no longer need to produce thousands of identical products to reduce their unit costs. To move on to the release of a new product, they do not need to change machines and equipment, but only make changes to the computer program.

Speed as a competitive advantage

It is known that a company that is able to quickly develop and bring new products and services to the market provides itself with a significant competitive advantage. Consumers prefer a particular company not only because its products or services are cheaper, have an original design or are of high quality, but often because they highly value the opportunity to receive them as quickly as possible. There are many examples of companies that have achieved significant success in reducing the design and production time of goods and services. To speed up the production process and increase pressure on competitors, many organizations around the world are looking to reduce bureaucratic restrictions and simplify their organizational structures; They create complex work groups, rebuild the sales structure, use JIT methods, CIM systems, flexible manufacturing systems, etc. And all this must be reflected in the production plan, indicating what opportunities are available to you to speed up the cycle of introducing new products or services to the market.

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Section – Production plan in the business plan. Business plan. Production plan. Part 1

Features of drawing up a production plan

Classification of production plans

Contents of the “production plan” section

Production resources and sales program

Justification of the premises

Selection of transport

Human Resources and Personnel Attraction

Environmental Safety

Cost forecast

Functions

Summary

Description of the enterprise

Description of activity

Marketing strategy

Production plan

Risks

Second option

Production system

Production planning

Planning of production capacity utilization

Planning for the location of production facilities

Production process planning

Planning equipment placement

Drawing up a general (aggregate) plan

Drawing up a master work schedule

Material requirements planning

Production Planning Tools

Gantt chart

Load distribution scheme

Network analysis PERT

Production planning methods

Project management

Project planning process

Scenario planning

Production control

Cost control

Control over procurement

Control over suppliers

Inventory control

Maintenance control

Quality control

Production Control Tools

TQM control charts

Model EOQ

Modern aspects of production

Technologies

Implementation of TQM

Reengineering

ISO Standards

Reduction of inventories

Outsourcing and other types of partnerships with suppliers

Flexibility as a competitive advantage

Speed ​​as a competitive advantage

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Speed as a competitive advantage