Capacity Planning, Inventory Management, And Supply Chain Management In Operation Management

Definition of Capacity Planning

Definition of capacity planning in operation management is as the operation planning which can give best output considering available resources and the need of the consumers refer to any service of material industry (Managementstudyguide, 2015). 

There are three factors of capacity planning considered for the said company:

1. Workload- to determine the quantum of workload input as per collaborative impact of all allocated work to satisfy the customers though allocation of even workload.
2. Level of service- this is linked with the load of work as per capacity of the system to ensure better level of service for any specific work with higher magnitude of capacity.
3. System capacity- to ensure best possible plan for any work by escalating presently available capacity to higher level to meet certain future load of work along with service factors(Markgraf, 2016).   

Capacities or product planning strategies as per time frame are:

1. Long term capacity- This depends upon different level of planning strategies as production capacity, design capacity, effective capacity and sustainable capacity.
2. Mid-term capacity- this is for medium period with the span of 3 to 4 years by fixing priorities of strategies like execution and ability capacity as per expectation of situation.
3. Short term capacity- this is depending upon regular plans of strategy taken up by the organization to ensure regular performance as per goals related to time frame(Root, 2016). 

Three strategies of capacity for the general manager of the company related to time span;

• Long term capacity- to ensure better result, long term measures are to be taken as per evolvement of technology for long term by deploying skilled man power as per requirement of the future period.  
• Middle term capacity- for enhancement of this capacity, general manager has to insist on latest technology development and training of manpower to cope up with the situation.
• Short term capacity- for ensuring short term capacity, adherence to the allotted workload is to be done with routine follow up of execution level of jobs(Arish, 2010). 

Two objectives of holding inventory by company:

1. To ensure uninterrupted production system as per plan with enough inventory to ensure sales as per plan, too.
2. To ensure inventory in case of situation beyond control for natural calamity or war when the availability of raw materials would be scarce(Careerride, 2016). 

Distinction between fixed order and variable period inventory management system is that the first one is practiced with the objective of a specific material to be ordered for a specific time frame; and the second one is management of such inventory system which is practiced considering the variable nature of inventory as per requirement, availability or time span (Businessdictionary, 2015). 

The referred inventory management system is Just In time or JIT which can enhance the efficiency of practicing the same with minimized level of inventory to hold as per their requirement for production process. Example of such is inventory of fast food chain of restaurants (Investopedia, 2015).

Kanban is such inventory management system which is originated in Japan through automotive industry giant Toyota. This system allows the company to make arrangements of inventory when it is required by the manufacturing process. Example of such is inventory management system followed by automobile industries (Lahiri, 2014). 

Recommendation for four management inventory tools for Mr. Swartz:

• Barcode data collection- To ensure proper control and classification of perpetual inventory system with accuracy and specific time frame to mitigate shortcoming of manual inventory system. .
• Cycle counting- To ensure accuracy of inventory management and respective control for efficient planning to enhance manufacturing process with priorities to inventory and higher importance.  
• ABC analysis- This inventory tools are used to ensure ranking of inventory as per the value of each item on annual basis with prioritization of items as per their role in the manufacturing process.
• Lot tracking and traceability- This inventory tool is used to identify the technical features of the inventories in respect of its properties. This instrument is responsible for enhancement of the scopes of basic management process of business and financial control(Myob, 2016). 

FMCG products are delicate in nature and their treatment in all aspects needs to be with utmost care as they are with limited shelf life and prone to damage.  Supply chain management of FMCG products in New Zealand is depending upon respective right strategies in the field of operation management as planning, procurement, processing and distribution. These steps of operation management are discussed below:

1. Planning- planning is most essential step in supply chain management. Planning of supply chain is depending upon the projection of sales and production for the FMCG Company.  Sales forecast is depending upon the sales trend and market research by the marketing team. This, in turn, is elementary for production planning which can be made possible through proper planning of supply chain management.
2. Procurement- Procurement is one of the main features of supply chain management. In case of procurement in New Zealand for raw materials of FMCG entities, supply chain associates with logical period of delivery and price are to be found out in order to ensure quality and timely production of the finished goods as per JIT method of inventory management.
3. Processing- Processing of operation management is depending upon the associates of supply chain. The processing includes production, warehousing, logistics and ensuring arrival of finished goods to the end user by the restricted time of products as per shelf life.
4. Distribution- Distribution of FMCG products are delicate in nature with ensuring sales of finished goods by the specified time of shelf life. Hence the supply chain management has to play a vital role with proper packing, storage as per specification with distributing to the distribution channel partners to reach end users by due time(Tarik, 2016).  

There are two basic objectives of holding inventory by the companies are –a) to ensure steady production process by holding inventory as per plan of period, and b) to make arrangements for exigency purpose for steady flow of raw materials in case of natural calamity or incident like war.

Six present trend of supply chain management are:

1. Starting demand plan at the end of specific cycle- To ensure proper flow of finished goods with the available best possible alternatives by adopting demand driven focus to influence demand with more efficient management to arrive at the objective of value added supply chain process.
2. Globalization- This trend of business has made introduction to new trend of supply chain management which possesses global impact with different level of supply chain stakeholders with the objective of localizing global business.
3. Stiff competition and price barrier- As there are competitors present in the market in plenty and the market is buyer driven, new trend of supply chain management is needed with cost effectiveness and ensuring quality management.
4. Method of outsourcing- Due to the latest enhancement of information technology and improving system, scope of global outsourcing is increasing with cost effectiveness and quality management for global need of manufacturing with product designing and distribution for the product.
5. Complex life cycle of product with short end feature- This trend is to ensure meeting up the demand of the market with products of latest technologies.
6. Collaboration between expansive supply chain associates- This trend is to ensure prudence business practices for the supply chain associates to be followed for professional output from the stakeholders(Robinson, 2016). 

Four strategies of supply chain management are as follows:

• To ensure segmentation for relationship with the features of differentiated and profitable relationship with the customers;
• To ensure demand driven supply chain for understanding the basic expectation of the end users to meet their requirement;
• To ensure synchronized service by making provision of visibility in order to raise awareness about the objective of supply chain for success;
• To ensure optimizing the utilization of available resources through proper application of circular economy(Murray, 2016).

As per the information provided about the resources, Call Us Plumbing Supply Company should follow the basics of circular economy model to fix their supply chain management strategies.  

So far the market research done on CDE Restaurants, it is observed that the entity is following the area of capacity control related to operation management in effective manner through the exercise of long, mid and short term capacity as per the time frame and priorities set by the management and market demand. The firm is following inventory management as per Just-in-Time or JIT module and supply chain management as per the improvised model of circular economy.  

To enhance performance management of Call Us Plumbing Supply, the company has to be stricter about inventory control. For this purpose, they have to implement strong supply chain management which can only be possible to switch over from linear economy to circular economy model.

References:

Arish, M. (2010, April 06). Capacity Planning. Retrieved May 16, 2017, from Slideshare: https://www.slideshare.net/aarish9696/capacity-planning-3652764

Businessdictionary. (2015). Fixed order quantity method. Retrieved May 16, 2017, from Businessdictionary: https://www.businessdictionary.com/definition/fixed-order-quantity-method.html

Careerride. (2016). What can be a company’s motive for holding the inventory? Retrieved May 17, 2017, from Careerride: https://www.careerride.com/fa-holding-the-inventory-reasons.aspx

Investopedia. (2015). What does ‘Just In Time – JIT’ mean. Retrieved May 17, 2017, from Investopedia: https://www.investopedia.com/terms/j/jit.asp

Lahiri, S. (2014, January 20). Capacity Planning for Dynamic Teams. Retrieved May 16, 2017, from Digite: https://www.digite.com/blog/capacity-planning-for-dynamic-teams/

Managementstudyguide. (2015). Capacity Planning. Retrieved May 16, 2017, from Managementstudyguide: https://www.managementstudyguide.com/capacity-planning.htm

Markgraf, B. (2016). Three Key Inputs to Capacity Planning. Retrieved May 16, 2017, from Chron: https://smallbusiness.chron.com/three-key-inputs-capacity-planning-14505.html

Murray, M. (2016, November 18). Strategic Supply Chain Management. Retrieved May 16, 2017, from Thebalance: https://www.thebalance.com/strategic-supply-chain-management-2221231

Myob. (2016, January 20). 5 tools for inventory management. Retrieved May 16, 2017, from Myob: https://www.myob.com/au/5-tools-for-inventory-management/

Robinson, A. (2016, January 04). 2016 Supply Chain Trends: 7 of 12 Trends that Will Drive Supply Chain Management in 2016. Retrieved May 16, 2017, from Cerasis: https://cerasis.com/2016/01/04/2016-supply-chain-trends/

Root, G. N. (2016). The Benefits of Capacity Planning. Retrieved May 16, 2017, from Chron: https://smallbusiness.chron.com/benefits-capacity-planning-15927.html

Tarik, C. (2016, March 27). Supply chain practices on FMCG products of New Zealand Dairy Products Bangladesh Ltd. Retrieved May 16, 2017, from Bracu: https://dspace.bracu.ac.bd/xmlui/handle/10361/7809