1. 1
Female Business Plan Competition
Operations planning, Wednesday March 16th
Lecturer: Wynand Bodewes
Maastricht Centre for Entrepreneurship

2. 2
Female Business Plan Competition
Maastricht Centre for Entrepreneurship

3. 3
Female Business Plan Competition
Operations planning, Wednesday March 16th
Lecturer: Wynand Bodewes
Maastricht Centre for Entrepreneurship

4. 4
Starting your venture
Maastricht Centre for Entrepreneurship

5. 5
Why planning (operations)
makes sense
Maastricht Centre for Entrepreneurship

6. 6
Planning your operations
Entails deciding on
scope of the venture’s operations
based on fear
based on calculus
I.e. what will you do, what do intend you leave to others
Maastricht Centre for Entrepreneurship

7. 7
Scoping
Forward
principal-agent issues between you and your distributors/
resellers
Backward
supplier hold-up (the supplier profits, and not you)
Maastricht Centre for Entrepreneurship

8. 8
Backward scoping
difficulties arise when
supplier has to commit to
site-specificity (i.e. co-location)
physical-asset specificity (i.e. moulds)
human asset specificity (i.e. training their workers)
because such commitments
are sunk-costs (buyer holdup)
render you dependent on a sole supplier (supplier hold-up)
Maastricht Centre for Entrepreneurship

9. 9
Scoping pitfalls
Sleeping with the enemy can be fatal
If you marginalize your role, also your margins
will be small
long term ability to compete
What happens to an IP broker at the
negotiating table?
you MUST sub-licence or the contract
with the IP owner will be revoked
you sell an idea, not a product or a
business
Maastricht Centre for Entrepreneurship

10. 10
Scoping
Present ability, resources & competences
Future ability to compete
cost leadership (process innovation)
differentiation (product innovation)
As scoping decisions affect one’s future competitive
positioning, it they also represent strategic choices
Maastricht Centre for Entrepreneurship

11. 11
Complementarity
Some activities are connected: they are complements
In such cases, scoping should consider the
complementary activities, not the individual ones.
e.g. product development & production capability may be
strongly interwoven
e.g. manufacturing subsystems with pre-standard
interfaces
e.g. complex and novel technology/product
Maastricht Centre for Entrepreneurship

12. 12
Outsourcing operational tasks
reduces operational risk as it reduces the managerial
task
minimises financial risk as it reduces investment needs
speeds up execution of one’s plan (no lead time to build)
outsourcing is a reversible decision
67 % of Inc 500 were started with less than $ 50,000 in
capital
21% required more than $ 100.000
Maastricht Centre for Entrepreneurship

13. 13
Scoping options
Industry life-cycle
initially one may have to do all itself, later there may be
others who can do tasks better and more efficient
Partner selection
profile your partner
large, established, dependent, dynamic, cost conscious, fast
Maastricht Centre for Entrepreneurship

14. 14
An analytical approach to scoping
Focus on value added of activities
re-occuring tasks
unique tasks
Map your value chain, transform it into a worksheet
if activity is strategic, then internalise (unless competitive
suppy industry)
non-strategic then outsource (unless threat of forward
integration by supplier)
calculate the “minimum efficient scale” to find out whether or
when it makes financially sense to internalise
Maastricht Centre for Entrepreneurship

15. 15
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16. 16
Break
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17. 17
Understanding your (future) operations
Attract investors to invest in the business
Guide the owner and managers in operating the business
Give direction to and motivate employees
Provide an environment to attract customers and
prospective employees
Maastricht Centre for Entrepreneurship

18. 18
Resource requirements & capacity planning
Operational implementation of the proposed venture
what resources are needed to execute the chosen business
model and the expected demand
Physical resources
Human resources
Machinery & equipment
This translates into financial resources
Maastricht Centre for Entrepreneurship

19. 19
Capacity planning
Required capacity
labour hours
machine hours
floor space
translates into
manpower requirements (FTE and positions)
equipment needs
scaling
Gradual / incremental
slack capacity
Maastricht Centre for Entrepreneurship

20. 20
Operating cycle
external
processing orders
internal
order fulfilment (production)
calendarize asset utilisation (peaks in capacity
requirements)
Maastricht Centre for Entrepreneurship

21. 21
Bill of capacity
Total standard time
of each piece of equipment
of each type of labour
to produce one unit of your (initial) product
Requires (and shows!) detailed knowledge of your
venture’s operational processes
equipment suppliers may help you specify the standard
times for your production process
but also potential sub-contractors (if you ask for it)
Maastricht Centre for Entrepreneurship

22. 22
Demand forecast & Master production schedule
Will you produce to demand or to inventory
build in some slack between demand and supply
transform demand into a production plan,
Anticipate to ramp up production!
Calendarise resource requirements (that result from your
forecasted sales)
manhours, machine hours
Capacity requirements
FTE, Machines
Maastricht Centre for Entrepreneurship