A business of any size can face struggles and competition at any time. That is why there are so many frameworks, methodologies, strategies, and tips that a company can consider implementing in order to boost its success. Everyone prioritizes what is best for the growth and chooses those methods that will meet customer expectations, generate revenue, and save money. There is no organization that wants to work at a loss, and being able to stop the overflow of different business risks is vital.
Therefore, in today’s article, we will look at the practice that is known as Aggregate Planning. When it comes to project management, aggregate planning can greatly elevate your business. So, let’s look closer at this method, explore its benefits, and find out which types of strategies your company can go for in order to prosper.
Aggregate Planning: Its Importance and Purpose for Business
What is aggregate planning? To understand this principle, it is essential to start with the definition. Aggregate planning is the process that balances between demand and capacity and creates stability in a workflow. Capacity is the number of units, which can be produced within a timeframe, while demand is the number of units that are required to fulfill the needs of a stakeholder or customer.
In general, this type of planning helps you to analyze, develop, and maintain a manufacturing plan the way that related activities, requirements, resources, and operations are properly managed and scheduled to fit in a project timeline and are operated at maximum efficiency. Usually, aggregate planning takes the mid-term period of 3 to 18 months and is focused on production levels, inventory management, targeted sales forecasts, etc.
If you want to realistically outline the future of your project for the upcoming months, this type of planning is what can bring you benefits in this case. But what are the exact advantages of aggregate planning?
- Better staff planning process
Being able to foresee production demand helps you to understand when and why your organization may need staff augmentation services. Any staff fluctuation can be easily minimized with the help of aggregate planning or controlled to the required state.
- Optimized space and resource management
By implementing this method of planning, when you fulfill the strategic objectives, it is possible to optimize productivity and profits. Besides that, you will be able to balance both short-term and long-term demands and improve processes.
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- Boost of overall efficiency and productivity
The strategy is effective for both services and goods, because it helps you to understand which materials and resources are necessary and when to procure them. It can even improve on-time delivery and supply chain operations, especially if you monitor the processes with any kind of supply chain software.
- Increased customer satisfaction
Any project management strategy or method that improves relationships with your clients is considered to be the best right away. This is quite understandable, and the common use of CRM solutions in different spheres only proves the point. It is easier to analyze and maintain your plans with aggregate planning, so the quality of your customer services won’t be able to fall behind.
This is only a glimpse of how the development of an aggregate plan can be effective, and the positive effect is seen soon enough after you start following this method. The key purposes and objectives of this planning method are based on increases and decreases. According to this approach, such decisions as the following can be made:
- Increment of utilization of equipment and devices;
- Decrement of costs and expenditures in different inventories;
- Enhancement of customer service;
- Minimization of variations of workforce level.
It all depends on what exactly you need to increase or decrease in your particular case. The main point is that a company needs improvement, and aggregate planning can give you a full picture of what can be expected and what to do.
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Types of Aggregate Planning Strategies
Project management includes different practices that are meant to lead your project to a successful outcome. It is vital to know how to combine the usage of project management software and tools like GanttPRO, pursuit of the principles your company has chosen, and the goals of your team. In order to understand why and when you can choose aggregate planning over the other methods, you need to know which strategies it can offer you. Some specialists define many different courses of action that a company can take, however, it is impossible to cover all possible scenarios. Therefore, let’s look at the 3 key types of aggregate planning that you can rely on depending on the focus of your establishment.
Level Strategy
All the manipulations you do by following this approach are mainly focused on the increases and decreases of the production rate and workforce level that depend on the changes of demand. It means that your actions will depend on demand, which is why you need to have a strong forecasting of it. In other words, if demand is low, you keep human resources and sustain the manufacturing capacity. If demand increases, any extra inventory can be absorbed in order to maintain the capacity and employment levels. The plan you create helps you to control these factors and keep them at a relatively steady level. It is often chosen by the companies with inventory that carries low costs.
Chase Strategy
The chase strategy is a bit more difficult than the level strategy, so you need to keep it in mind. It is suitable for your business if your goal is not to hold the variables at a set level. The plan is to constantly adjust capacity so that it matches demand. To put it differently, you are always chasing demand. It means that your company produces only when there is a need. On other days, you simply wait and save your money and resources until the order comes.
Hybrid Strategy
The third option is a combination of the previous two strategies. In case you choose the hybrid version, your plan will include the goal of keeping the balance between the levels of workforce, inventory, and production rate and, at the same time, the need to respond to any change in demand. This is a more flexible variant, because demand is satisfied and costs are kept at low levels.
All situations and organizations are different, so it is up to you to decide which option is the suitable one. Sometimes, a firm turns to other companies that can give them some insights on their experience or advise what can be better. Whether you lead a startup or an enterprise, you are not alone in this sea of choices.
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Conclusions
Aggregate planning is a good way to improve the project management practices that you currently utilize. Of course, you need to be ready for sudden changes in demand or project workflow and possible unexpected events that can lead to bottlenecks. Changing capacity, production, and other levels of resource – everything has an effect. Explore the available options, gather market insights, and define your business goals in order to avoid possible mistakes and take the lead.
If you have an idea of developing software that will increase the positive impact of aggregate planning or any other project management approach you are using, you can contact us and get help from seasoned professionals.
