Business Plan
- EXECUTIVE SUMMARY
This is a business plan for Rael & Nick Footwears established in 2012. The business plan focuses on operational strategies aimed at addressing product design and process selection. The operational plan further elaborates on how the firm intends to gain a competitive advantage in the market. The plan also highlights the key components of supply chain management that shall be used and the role supply chain management plays in the firm, Total Quality Management and how it can be exploited as a competitive advantage. This business plan intends to present in a summary form the strategies the firm shall employ so as to penetrate the market, retain its customers and ensure sustainable revenue and profits in the long term. This will be done while considering the potential risks the firm may face from competitors in the same market.
- BACKGROUND
Rael & Nick Footwear has been established to manufacture leather shoes for school going children aged between 5-16 years of age. The firm is expected to have a manufacturing unit, ware houses, offices, transport fleet of two trucks and one van. Staff establishment of the firm shall be of about twenty (20) employees head hunted from firms that have demonstrated high performance and growth in the shoes manufacturing industry.
- OPERATIONS STRATEGY
The success of Rael & Nick Footwear will largely depend on how it runs its operations rather than the products it intends to offer the market. Operations strategy will therefore entail deliberate measures of ensuring well designed and controlling of systems responsible for the productive use of raw materials, human resources, equipment and facilities in the manufacturing of shoes. How these productive resources are managed will play a critical role in the strategic growth and competitiveness of Rael & Nick Footwear. The firm therefore intends to give priority to efficient acquisition and utilization of all its productive resources.
Further, operations strategy will be geared towards reconciling the requirements of the market with the capabilities of the firm’s operational resources with a view to achieve operational superiority that cannot be easily imitated by the competitors.
- Top down perspective which is concerned with what the firm intends its operations to achieve in both short and long run.
- Operations resources perspective concerned with what available operations resources can do.
- Market requirement perspective guided by what the market position requires operations to do.
- Bottom up perspective from the day to day experiences suggesting what operations should do to improve and achieve.
- IMPACT OF OPERATIONS STRATEGY ON PRODUCT DESIGN AND PROCESS SELECTION
Product design and process selection is an important aspect in any manufacturing set up like Rael & Nick Footwear. The choice of operations strategy will have an impact on the firm’s product design and process selection. Product design takes into consideration the quality and specifications of the products to be manufactured while process selection involves the manufacturing approach adopted for conversion of raw materials into finished products (Bose 2002).
The operations strategy to be adopted as discussed above is intended to achieve the following objectives:
- Achieve production at a low cost even compared to competitors.
- Achieve quality production in accordance with specifications and without errors or defects.
- Achieve high speed in production so as to rapidly meet customer needs and shorten the lead times between when customers place their orders and when they actually receive the products.
- Achieve dependability by being able to deliver products to customers as promised in either the quotations or the firm’s marketing slogans.
- Achieve flexibility in the following aspects with a view to meeting changes in the market trends and customer needs:
- Flexibility to change volumes of production so as to meet demand requirements.
- Flexibility to change time spent in production for rapid response.
- Flexibility to change innovate and subsequent introduction of new designs to meet any changes in customer needs.
- Flexibility to change the mix of products available for sale to meet broad customers’ needs.
It is anticipated that Rael & Nick Footwear will achieve excellence in flexibility of either two or more of the above operational areas. The above objectives will greatly determine the product designs and process selection.
- SUPPLY CHAIN MANAGEMENT
Supply chain management is an important aspect in any manufacturing since it ensures that the firm has all its requirements whenever there is need for them and that the requirements are obtained at a competitive cost, of good quality and from the right source (Kotler 1984). Once the materials are received, supply chain management further ensures that the transformation of the raw material into finished goods is well coordinated to achieve the required quality and at a low cost. The last activity in supply chain management is distribution of the final product to the locations where customers will obtain them for purchase.
Supply chain management therefore integrates all the activities involved in sourcing for raw material, conversion and processing of raw materials into finished products and dispatching the same to the market place.
The three key elements of the firm’s Supply Chain Management will entail:
- Structuring
This is the breakdown of the supply chain network into components for easy of coordination with a view to determine areas of inefficiencies and special attention. The components will entail the Suppliers, items to be sourced, in pound logistics, manufacturing process and finally out bound logistics to ensure the final products reach the intended market destination. The various components will then be assigned to specific individuals with the necessary skills to ensure they are well coordinated so as to achieve a competitive edge.
- Purchasing
The firm will ensure proper synchronization of its supply requirements with those of production so as to meet the customer demand with a view of spending as little as possible in all the operations involved. Purchasing will therefore be geared towards achieving procurement of the right materials, from the right suppliers, at the right price and at the right time.
- Managing of the supply chain
Management of the supply chain can play an important role in the operations and profitability of Rael & Nick Footwear. This is because of the fact that costs of running any business to a great extent determine the profitability of the firm. The lower the costs, the higher the profits at low prices. high cost of running a business can be traced to the supply chain activities such as the cost at which the supplies were purchased, cost of transporting the purchased materials, cost of storage, cost of production and cost of distribution to the market. If well managed, these costs can be minimized collaboration with the key players such as the suppliers and distributors.
- TOTAL QUALITY MANAGEMENT- COMPETITVE ADVANTAGE
Adoption of Total Quality Management or a similar quality management practice can enable a firm attain some sustainable competitive advantage. This is because TQM is capable of facilitating achieving some level of cost based advantage as well as generating significant barriers to imitations which are key for sustainability (McCarthy & Pervaleut 1994).
Total Quality Management is attained through ensuring that the top level management are equipped with transformational leadership skill, employees are trained in relevant skills, creation of teams that are committed to TQM goals and at the same time, innovative in solving any likely production problem and above all, creating and embracing a culture of quality.
Rael & Nick Footwear will therefore adopt Total Quality Management as a strategy in its operations from designing to production and even distribution and in so doing, enjoy the following competitive edges:
- Improving quality of its products with a view to increase sales and revenue over a long period of time as compared to its competitors.
- Reduction of risks associated with poor quality by eliminating all possible inefficiencies in the production process.
- Achieve customer retention due to customer satisfaction as customer’s quality expectations are adequately met.
- Reduction of high rework related costs as well as wastage with a view to achieve low cost of production which translates to low prices that will be affordable to the customers.
- KEY ELEMENTS OF JUST IN TIME MANUFACTURING
Just in time is a popular management system applied in manufacturing set up where raw materials are delivered to the production point for production of expected units that are actually required in the market at the place and time when they are actually needed.
The objective of Just in Time manufacturing is to ensure that customers get their products when they actually need them, at the physical location they want them and of particular importance is at a minimum cost.
The benefit Rael & Nick Footwear is likely to enjoy on adopting JIT Manufacturing includes the following:
- Reduced inventory costs.
- Improved quality in its production process.
- Reduction in operational related costs.
- Reduced space requirement especially for storage facilities.
- Shorter lead times than competitors.
- Better relationship with its suppliers and distribution agencies.
- Close supplier ties and networks.
- Continuous improvement.
Rael & Nick Footwear intends to adopt JIT in its operations. Implementing this concept will impact on the firm’s quality assurance.
- Responding to actual market demand.
- This will require prompt transmission of demand so as to plan for production to meet the demand. The communication channels must therefore be very reliable to avoid any delays in relaying the required information.
- The firm must have in place a production system that is fast and flexible so as to respond quickly to any changes in demand.
- Cost minimization.
- The quality assurance will ensure that there is wastage minimization such as excessive production, excessive inventories, waiting for parts, moving materials and unnecessary capital requirement.
- The quality assurance will ensure that quality is increased through quality control, working with the quality efforts of suppliers so as to achieve supply of quality raw materials.
References
Bose, C. D. (2002). Principles of Management and Adminstration. New Delhi.
Mc Carthy, J. & Pervaleut, W. (1994). Applications in Basic Marketing: Clipping from the Popular Business Place. Massachusetts: Irwin Inc
Kotler, P. (1984). Principles of Marketing. New York: Prentice Hall
