In the late 1970s, the idea of economics applied to a strategy of Production Planning and Control (PPC) usually pertains to techniques aimed at reducing costs and maximizing a company’s use of resources in attaining its production targets. Herein is a report on some of the certain above strategies based on an analysis of the document in reference:
1. Demand Management
Differential Pricing – Price reduction during slack periods to stimulate demand in peak seasons.
Advertising and Promotion – Effective use of advertising resources to increase consumption during times of low demand.
Backlogs – Delaying orders in an effort to shift demand from peak periods to slack ones.
Development of Complementary Products – Production and marketing out-of-season products or according to the principal goods so that production and sales do not match (for example, heater manufacturing by a refrigerator company).
2. Supply ManipulationStrategies
Employment Policies – Surge in employment to reflect the augmented demand.
Overtime and Undertime – Hire and lay off laborers with the flexibility allowed by fluctuating demands.
Part-time or Temporary Labor – Using fewer workers for shorter periods can lower production costs.
Subcontracting – Shifting part of production outside the organization in order to decrease the sum of internal fixed expenditures.
Holding Inventories – Manufacturing during slack times and holding stock to satisfy sales requirements during busy periods.
3. Pure and Mixed Strategies
Pure Strategy – Control both the demand and the supply through one technique. For instance, practice a fixed level of subcontracting or keep the number of employees constant.
Mixed Strategy – Actual use of more than one strategy, such as stock control, manpower scaling, and changing the demand, to obtain operational efficiency and economy.
The PPC strategies can generate considerable cost benefits. The right collaboration of production with an economical cost will keep the customers satisfied and the business profitable; I can further share information on these strategies if you want!