Tools and Techniques of Planning

Learning Objectives:

• Become familiar with 6 different sets of tools to aid in effective planning– Techniques for assessing the environment– Tools for allocating resources– Tools for production planning– Tools for project planning – Techniques for scenario/contingency planning– Creativity aids

Tools for Assessing the Environment

• Environmental scanning• Forecasting– Simulation techniques– Delphi Technique

• Benchmarking

Tools for Allocating Resources

• Budgeting - a numerical plan for allocating resources to specific activities

Tools for Production Planning

• Scheduling Tools– Gantt charts– “Load” charts– Linear programming

Project Planning Tools

• Flow Chart• PERT Network• Process Decision Program Chart• Tree Diagram

Scenario Planning

• “Scenarios” are descriptions or stories of possible futures

• Enhances managerial thinking– move from advocacy to exploration

• Anticipation of change brings faster reaction to uncontrollable events

Creativity AidsOsborn Model Fact-finding Idea-finding Solution-findingAnatomy of a Creative “Moment” Preparation Incubation Illumination Translation Four Tools for Creativity Belief in your own creativity Absence of judgment Precise observation Penetrating questions

Brainstorming Rules

• Never criticize ideas • defer judgment

• Display all ideas • so team members can see and build on them• record each idea as expressed, without interpretation

• Seek quantity of ideas • they breed quality

• Set a time limit • 30 minutes or less

Planning Tools and Techniques Summary

– Techniques for assessing the environment– Tool for allocating resources - budgeting– Tools for production planning - scheduling– Project planning tools – Scenario/contingency planning– Creativity aids

Assessing the environment Environmental scanning The screening of large amounts of information to anticipate and interpret

change in the environment. Competitor Intelligence The process of gathering information about competitors— who they are?; what

are they doing?Is not spying but rather careful attention to readily accessible information from

employees, customers, suppliers, the Internet, and competitors themselves. May involved reverse engineering of competing products to discover technical

innovations. Global Scanning Screening a broad scope of information on global forces that might affect the

organization. Has value to firms with significant global interests. Draws information from sources that provide global perspectives on world-

wide issues and opportunities.

ForecastingThe part of organizational planning that involves creating predictions of outcomes based on information gathered by environmental scanning.Facilitates managerial decision making.Is most accurate in stable environments.TypesQuantitative forecastingApplying a set of mathematical rules to a series of hard data to predict outcomes.Qualitative forecastingUsing expert judgments and opinions to predict less than precise outcomes.Collaborative planning, forecasting, and replenishment (CPFR) softwareA standardized way for organizations to use the Internet to exchange data.

Assessing the environment Cont….

QuantitativeTime series analysisRegression modelsEconometric modelsEconomic indicatorsSubstitution effectQualitativeJury of opinionSales force compositionCustomer evaluation

Forecasting Techniques

Making forecasting more effective

Use simple forecasting methods.Compare each forecast with its corresponding “no change” forecast.Don’t rely on a single forecasting method.Don’t assume that the turning points in a trend can be accurately identified.Shorten the time period covered by a forecast.Remember that forecasting is a developed managerial skill that supports decision making.

The benchmarking processThe search for the best practices among competitors and non-competitors that lead to their superior performance. By analyzing and copying these practices, firms can improve their performance.Form a benchmarking team.Identify what is to be benchmarked, select comparison organizations, and determine data collection methods.Collect internal and external data on work methods.Analyze data to identify performance gaps and the cause of differences.Prepare and implement an action plan to meet or exceed the standards of others.

Steps in benchmarking

Form a Benchmarking Planning Team

Gather Internal and External Data

Analyze Data to Identify Performance

Gaps

Prepare and Implement Action Plan

Best Practice

Types of resourcesThe assets of the organizationFinancial: debt, equity, and retained earningsPhysical: buildings, equipment, and raw materialsHuman: experiences, skills, knowledge, and competenciesIntangible: brand names, patents, reputation, trademarks, copyrights, and databasesStructural/cultural: history, culture, work systems, working relationships, trust, and policiesBudgetsNumerical plans for allocating resources to specific activities.Used to improve time, space, and use of material resources.Are the most commonly used and most widely applicable planning technique for organizations.

Allocating resources

Types of budgets

Cash Budget Forecasts on hand and how

much will be needed

Revenue Budget projects future sales

Expense Budget Lists primary activities and

allocates dollar amount to each

Profit Budget Combines Revenue and expanse budgets of various units to determine

each unit’s contribution

Be flexible.Goals should drive budgets—budgets should not determine goals.Coordinate budgeting throughout the organization.Use budgeting/planning software when appropriate.Remember that budgets are tools.Remember that profits result from smart management, not because you budgeted for them.

Suggestions for improving budgeting

Allocating resources: scheduling, charting

SchedulesPlans that allocate resources by detailing what activities have to be done, the order in which they are to be completed, who is to do each, and when they are to be completed.Represent the coordination of various activities.Gantt ChartA bar graph with time on the horizontal axis and activities to be accomplished on the vertical axis.Shows the expected and actual progress of various tasks.Load ChartA modified Gantt chart that lists entire departments or specific resources on the vertical axis.Allows managers to plan and control capacity utilization.

Gantt Chart and Load Chart

Contemporary planning techniques ProjectA one-time-only set of activities that has a definite beginning and ending

point time. Project managementThe task of getting a project’s activities done on time, within budget, and

according to specifications. Define project goals Identify all required activities, materials, and labor Determine the sequence of completion ScenarioA consistent view of what the future is likely to be. Scenario planningAn attempt not try to predict the future but to reduce uncertainty by

playing out potential situations under different specified conditions. Contingency planningDeveloping scenarios that allow managers determine in advance what

their actions should be should a considered event actually occur.

Project planning process

Define objectives

Identify activities and

resources

Establish sequences

Estimate time for activities

Determine additional resource

requirements

Compare with

objectives

Determine project

completion date

Thank You