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Production or Service Strategy Plan

Once a reasonable and approved market plan is made part of the business plan it is simpler to prepare a production and service strategy. The market strategy preceeds the production and service strategy because many of the related expenses are related to which products or services are produced.

The production strategy must answer a basic question. What will it cost to produce the levels and mixes of the sales forecast in the market strategy?

Underneath this main question are a number of subtopics that have a large impact on the answer.

  • What process and technology will be used to produce and ship the desired products or services?
  • Is there adequate plant capacity to satisfy the orders?
  • Does the business have access to enough of the proper equipment to do the job?
  • Which business location will produce the product or provide the service?
  • What are the material requirements to do the job?
  • How much labor or supervision will be required?
  • Does the labor force have the proper skills, experience and training to do the job?
  • What production schedules will be needed to satisfy the customers?
  • Are there special delivery requirements - such as just in time scheduling?

Important Production Analyses

As was the case with the Market Strategy portion of the business plan - there are key analyses to be completed for a thorough look at the production strategy.

  • Identification and evaluation of the cost of production for each product or service - broken down into fixed or variable categories.
  • Rating of relationships with suppliers including product availability, quality and the costs for material or supplier services.
  • Identification of required lead times for obtaining materials.
  • Evaluation of the lead times needed for the production process itself.
  • Evaluation of production efficiency and potential improvements available through enhanced technology or employee training.
  • Identification of quality control measures needed.

These analyses can help ensure than the revenue projections determined in the market strategy are achievable and reasonable in light of production capabilities. Further, the production analyses may reveal where production economies of scale might be achieved - identifying where increased sales efforts would be beneficial.

Sales projections for a product should not exceed production capabilities to produce these items. Also, projected sales volumes should be ample enough to make it economically advantageous to cover the basic costs of production. This will require a combination of sales adjustments or production cost cutting efforts before a final production stategy is included in the business plan.

Business Plan Strategy for Production

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