Operations plan for a mid-sized company's sensor production department

Operations Plan

Functional Group

The company in focus for this paper is a mid-sized company with over 1000 employees and the functional group that has been chosen from this company is the production department, with specific focus on the sensor capabilities and operations of this department. The reason behind choosing this particular department for this paper is the rising popularity of production processes and the importance of sensors with the increasing awareness and knowledge of the end consumer of the product. These two reasons are the primary factors for the focus on this department. Furthermore, the quality and life of the sensors are also being challenged by the end users who expect only premium performance and if they don't receive it, the company will most likely have to face customer retention problems as most of the customers might focus on other competitors with better products.

The primary purpose of the department will be to focus on creating and improving high quality sensors that not only satisfy their end users and targeted audience but also help improve customer retention levels for the company. Thus the work schedule for this department will include not only investment in the input for creating new sensors from scratch but also investing in the necessary research and development that will lead to improving the sensors as well as correcting any complaints or performance issues that arise after release. Such a department will be divided across three teams roughly, one that is dedicated to the technical side of creating and maintaining sensors, another that focuses on market R&D and another that focuses on the sales of the product and how it can be improved through improving the sales approach and pricing method. Experience technicians and R&D experts will be necessary with at least 5-10 years of specific experience in the industry while the marketers can be fresh blood; however, a balance between new hires and experienced individuals in this sector could also come in handy.

Period covered by the operational plan

The overall time frame for this operation plan will be short-term, i.e. 2 years, and will be open to expand further based on the successful return from the operation plan and adjustments will also be made based on any shortcomings in the operation plan that might surface. This is the chosen time period for this operation plan as it takes at least a year to design and manufacture a sensor; hence a batch of similarly structured sensors will take up a year for production and distribution. Similarly, any corrections required in the manufactured sensors can anywhere around 3 months up to 5 months. The initial success and effect of the operations plan could thus be gauged through analysis after two years of the completion of the operations plan.

The production department will also take care of the overall design innovations of the sensors as well as the automation degrees needed in the sensors structures. Currently, the operations time will include a timetable for the following responsibilities of the production department:

The manufacture and production of a batch of four high quality sensors with each having its own dedicated assembly line

Scheduling of the manufacture and distribution of these sensors based on the marketing and sales ratios given from the R&D department and marketing department

Furthermore, scheduling of the first shift and second shift will need to be done accurately and choice will have to be made if and when to apply the second shift as the second shift selection can prove to be far more expensive than completing work in the first shift alone

Calculations and assessments will need to be completed on the choice to employ the second shift as when implemented, it can give the company good returns and higher production rates, however it will also cost them 50% more; so a thorough analysis will first need to be done on when it will be feasible to employ the second shift, financially speaking.

Another aspect that will need to be covered initially by the production department alone will be the overall cost analysis and project costs incurred, as the costs and expenses can vary significantly depending on the time allocated to it; e.g. A correction in a sensor that takes 3 months could cost around $275,000, while a correction spanning over 5 months could cost around $415,000. Hence, time management will need to be addressed accurately and quickly.

Differentiation

The company will choose to apply the differentiation strategy and complement that with the product life cycle approach. This overall tactic will help the company attain a clear path and focus on the attainment of competitive advantage in the market by manufacturing those ranges of products that high-end and significantly aware end users will find user-friendly and easily accessible. This will be done while simultaneously minimizing the R&D expenses from prior years and the targeted clientele will also be shifted in the long run from High Tech to Low Tech buyers. The pricing strategy used will be to competitive prices that can compete with other premium products in the market and the overall investment in production and performance scales will be directly proportional to the overall ratios of demand from the market.

Pricing strategy here could be done based on two different strategies as well, aside from the competitive approach or, in other words, the sales life cycle approach. One strategy could be to charge in accordance to the full product cost i.e. pricing the product based on the money that went into its production and then adding the percentage of profits that can be made on it without letting the price get inaccessible. Another strategy that will most likely be most useful to apply with the aforementioned approach will be the product life cycle cost whereby the company costs the amount of money whereby the customer will realize that the utility of the product is directly proportional to its price and therefore the price is fair.