Organizational Responsibilities, Mission Statements, and Capacity Planning in Business Operations
Organizational Responsibilities
Operations
Responsible for producing goods and services. Goods are physical items, while services provide a combination of time, location, and psychological value.
Marketing
Focuses on understanding consumer wants and needs, and selling and promoting the organization’s goods or services.
Finance
Manages financial resources, including securing funds, budgeting, analyzing investments, and providing capital for operations.
The Balanced Scorecard (BSC)
A management system that helps organizations clarify their vision and strategy. It considers four perspectives:
- Customer
- Financial
- Internal Business Process
- Learning and Growth
The BSC balances financial and non-financial performance, internal and external performance, and past and future performance. It helps organizations differentiate themselves from competitors.
Balanced Scorecard Factors:
- Suppliers: Delivery performance, quality, number, location, duplicate activities
- Internal Processes: Bottlenecks, automation potential, turnover
- Employees: Job satisfaction, learning opportunities, delivery performance
- Customers: Quality performance, satisfaction, retention rate
Mission Statement
Defines the purpose of an organization and serves as the basis for organizational goals. It shapes public perception and guides employees, suppliers, and customers.
Productivity
Measures the effective use of resources, usually as the ratio of output to input. It helps track performance over time and compare across industries or countries.
Forecasting & Approach
Qualitative Forecasting
Uses soft information like human factors, opinions, and hunches.
Quantitative Forecasting
Relies on hard data, such as historical data or causal variables.
Forecasting Methods:
- Naive: Uses the previous period’s value as the forecast.
- Moving Average: Averages recent values, updating as new data arrives.
- Weighted Moving Average: Assigns weights to past values, emphasizing recent data.
- Correlation: Measures the relationship between variables to predict future values.
- MAD (Mean Absolute Deviation): The average absolute forecast error.
- MSE (Mean Squared Error): The average squared forecast error.
Life-Cycle Assessment
Evaluates the environmental impact of a product or service throughout its life cycle (introduction, growth, maturity, decline).
CAD (Computer-Aided Design)
Uses computer graphics for product design, increasing productivity, creating a manufacturing database, and enabling simulations.
Reverse Engineering
Dismantling and inspecting a competitor’s product to discover improvements.
Capacity Planning
Determines the upper limit of an operating unit’s workload. Factors include equipment, space, and employee skills. Overcapacity leads to high operating costs, while under capacity strains resources and risks losing customers.
Capacity Strategies:
- Leading: Building capacity in anticipation of future demand.
- Following: Building capacity when demand exceeds current capacity.
- Tracking: Adding capacity incrementally to keep pace with demand.
Capacity Planning Steps:
- Estimate future capacity requirements.
- Evaluate existing capacity and identify gaps.
- Identify alternatives for meeting requirements.
- Conduct financial analyses.
- Assess qualitative issues.
- Select the best long-term alternative.
- Implement the chosen alternative.
- Monitor results.
Factors to Consider:
- Existing capacity
- Expertise
- Quality
- Demand nature
- Costs
- Risks
Design Capacity
The maximum output rate or service capacity a system is designed for.
Effective Capacity
Design capacity minus allowances for personal time, maintenance, scheduling delays, and product mix changes.