October 7, 2013
Learning Team Reflection - Week 3
This week a portion of our study focused on sales and operations planning. The sales and operations planning process helps companies provide better customer service, lower inventory, shorten customer lead times, stabilize production rates, and give top management a better view of the business (Chase & Jacobs, 2011). Sales and operations planning evolved into aggregate planning that stresses the importance of cross-functional teamwork and tightly integrated efforts between sales, distribution, logistics, operations, finance, and product development (Chase & Jacobs, 2011). Aggregate planning focuses on intermediate-range (three to 18 months) plans that target lowering costs and using capacity most efficiently. The main purpose of an aggregate plan is to determine the best combination of production rate, workforce level, and inventory (Chase & Jacobs, 2011).
The chase strategy is one of three production strategies for aggregate planning in use today. According to Hamlett (2013), the chase strategy, or demand matching strategy, sets production to meet or match the demand for products. It is an appropriate strategy for production situations with variable demand and little to no inventory. To handle variations in demand, a company matches the production rate to the order rate by hiring and firing employees. The chase strategy is used mostly in service industries that focus on meeting forecasted demand and adjust the workforce accordingly. Meeting demand can come in the form of workforce adjustments that include the use of day labor, contractors, seasonal workers, and overtime pay.
Advantages and Disadvantages
A primary advantage is the flexibility to meet demand fluctuations. Another advantage is keeping inventory low, freeing up cash to buy other items such as raw materials or components, thus reducing
References: Auguston, K. (1992, December). Neiman Marcus Plans Picking to Meet Peak Holiday Demands. Modern Material Handling, 10(25), 44-48. Chase, R., & Jacobs, F. R. (2011). Operations and Supply Chain Management (13th ed.). Boston, MA: McGraw-Hill Irwin. Hamlett, K. (2013, Spring). Strategies Used in Production Planning & Scheduling . Retrieved from http://smallbusiness.chron/strategies-used-production-plannig-scheduling-1808.html Kash, R. (2011, April). The Hershey Company: Aligning Inside to win on the Outside. Retrieved from http://www.iveybusinessjournal.com/topics/strategy/the-hershey-company-aligning-inside-to-win-on-the-outside-2#.UkyL72SG06o Ritzman, L. P., & Krajewski, L. J. (2003). Foundations of Operations Management. Upper Saddle Reiver, NJ: Prentice Hall.