From the course: Creating a Business Plan

Manage production

From the course: Creating a Business Plan

Manage production

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- A major component of your operating portion of your business plan is how you're going to manage production. Where are you going to make your product? Are you going to insource or outsource? What suppliers are you going to use? Will you own or lease the equipment? You'll also need to discuss how are you going to meet demand, manage facility utilization and deal with peak or slack periods of demand? Once you've built your operating plan, ask do your operations match your product strategy? For example, if you're a low cost product provider will your operations grow and give you scale so you can keep your costs low? If you're a high quality supplier, are your suppliers up to the task of meeting your high quality product? Some key things to consider as you build this operating plan is what do you do in terms of production flexibility? If there's a demand swing if you get a huge order in, how are you going to meet that need? If all of a sudden orders dry up how are you going to manage your facilities if they're not full? What are the people demands for managing production? You don't just need the frontline personnel. You can't forget things like supervisors, safety, shipping, supply chain. As your organization grows and as your operations grow, there are some regulatory requirements in terms of the number of people you have to have and the job families they need to fill. This section of the business plan should spell those needs out. And the last thing to consider is how are you going to make your operations less capital intensive? When you tie up a lot of money in property, plant and equipment that's less money you can spend elsewhere. Trying to reduce the capital intensity of your business is going to improve your overall profitability. And it's something you should think through in this section of your business plan.

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