Operations Strategy Case Study of Factory

operations Strategy Case Study of manufactoryConsultants Report An operating(a) ReviewofThe pulverizationContents (Jump to)1. Executive Summary2. Introduction3. Strategic Review4. Operational Issues4.1 Processes4.2 Plant/Equipment4.3 Customers4.4 Contractors/Supply Chain4.5 Personnel4.6 Environmental4.7 commercialize/Competitors5. Recommendations6. Further Recommendations7. Conclusion8. Bibliography9. Appendices1.Executive SummaryThis Report has identified the Pea Factory (the Factory)s operations strategy as focusing on producing forest products, on time and satisfying the bespoke requirements of its nodes. It achieves this with its flavour controlled operational bear upones and procedures.Unfortunately these makees and procedures are not without problems, which are categorised under the following headings do workes, personnel, environmental, bring/machinery and commercialize/ disceptation. Problems encountered with quality issues can be turn to by carrying out a review of the completely subroutine using qualitative and quantitative methods, applying benchmarking techniques and reviewing the whole system and applying total quality centering methodology.The introduction of computerisation into the administrative process would eliminate human error and remove chat problems within the control room. It whitethorn also submit the opportunity of reducing costs (over a period), with the removal of personnel.The add up chain is a fundamental commonwealth for focus, as this is crucial for the survival of the business. Ensuring the supply chain is running smoothly is not only an extremely difficult thing to achieve and it can also be extremely costly. The management team need to focus on maintaining good relations with all suppliers, contractors and subcontractors.M all of the issues, much(prenominal) as lack of capacity, the requirement for extra equipment, increased market share etc could easily be mitigated with the acquisition of a competitor. This necessarily serious consideration, although it obviously requires investment by the parent union. In the meantime however, by implementing the recommendations in this report, the Factory can and will move closer to achieving sustainable competitive advantage and improving productivity, whilst reducing costs.2.IntroductionThis Report has been commissioned to provide an operational review of The Pea Factory (the Factory). The operations strategy will be identified together with an analytical review being carried out on the operational problems facing the Factory. Areas such as how the entire process is controlled, the use and maintenance of the equipment, the focus on the guests needs and the use of quality control amongst separate areas.The Report will also make recommendations for values to the operation, which will eliminate many of the problems highlighted. For instance, the introduction of a computerisation into the control room to monitor the process from start to final stage would remove many of the timing and communication issues experienced.In undertaking the research for this report there were a number of other aspects of the operation that were identified, which would benefit from improvement and they are also contained within this report.3.Strategic ReviewIn order to complete a strategic review of the Factory, it is required to first understand what is meant by the term operations strategy. According to Slack et al1, it isthe total pattern of decisions and actions which set the role, objectives and activities of the operation so that they contribute to and support the memorial tablets business strategy.In order to develop an operations strategy, the operations manager has to consider a number of factors such as the needs of customers, as well as what the competition are doing. According to Porter(2)an organisation should aim to achieve sustainable competitive advantageThe Factory achieves this by focusing on their customer requirement s and by producing a quality product, in a timely fashion and at a reasonable cost. The ability to adapt and be flexible in its approach to its customers demands is an important feature in the organisations strategy. The Factory concentrates on its core competencies (that of the production of frozen vegetables) rather than diversifying into other products such as pizzas, pies and other products. Specialisation is key to the strategy.Whilst sufficient culture is known about the Factorys operations strategy, little is known about the Groups strategy, and how the Factorys operations strategy fits with it, other than to say that they are medical specialist food producers.4.Operational IssuesA review of the processes and procedures of the Factory using a SWOT (strengths, weaknesses, opportunities, threats) analysis was undertaken (see Appendix 1 attached). This identified several operational problem areas, which have been grouped under the following headings processes, plant/equipment, customers, contractors/supply chain, personnel, environmental and market/competitors.4.1ProcessesThe operations process is coordinated from the control room. Unfortunately the control systems used are manual ones, with any change in process being amended on the board, this manual process could lead to errors, miscommunication and time delays.With the limited daily processing capacity, even if there was greater demand, the organisation would not be able to cope. Further, there is little room for error with the tight time line from picking to blanching.Quality issues with stock held in quarantine, and pot peas needing to be run though the Sortex colour sorter, several times, results in wasted time and cost.4.2Plant/EquipmentThe extensive use of expensive machinery means that the organisations crashs are high with costly down time through failure ( crossly unplanned). This has a detrimental onus of the Factorys ability to achieve its targets and to put to death orders, costing the organisation both time and money.4.3CustomersTailor made packaging for its customers may have a negative effect on the cost base. self-coloured the customers needs is an important aspect of the organisations strategy, but the question needs to be asked, as what cost? In order to come this question, lucubrate financial information would be required for analysis.4.4Contractors/Supply ChainThe use of so many contractors in various parts of the process does lead to problems such as communication, control and quality. Differing yields and size containers results in identification and storage difficulties. Using multiple storage contractors could result in missing stock and lack of quality control. This could result in down time and ultimately affect the quality of the product.4.5PersonnelFluctuating staff levels at different times of the year causes particular problems for the organisation. The need to train and re-train new staff results in delays and errors. Lack of communication c auses costly delays. Such seasonal work may not be entirely satisfying thereby creating problems with lack of job satisfaction, and therefore lack of attention to detail.4.6EnvironmentalEnvironmental issues are a major headache. The weather clearly impacts on the production of the pea crop. The varying weather patterns create uncertainty and scheduling issues. The crop rotation cycle also restricts the level of produce provided in any given region at any given time. This limiting factor can result in not enough of the product being available.4.7 merchandise/CompetitorsAn analysis of the competitive environment reveals that there is at least one privately owned competitor who is using aggressive pricing in the market. in that location is also the issue of the major retailers controlling the market. If one of the retailers decides to stop using the Factory so this will negatively impact the level of profitability and sustainability of the business. every last(predicate) of these is sues need to be addressed immediately and the recommendations for doing so are highlighted in the next section.5. RecommendationsAll operation managers experience difficulties and this is certainly the case at the Factory. In order to achieve operational effectiveness, Slack et al (3), agrees that there should beSmooth customer flow, a clean, well-designed environment, sufficient goods to satisfy demand, sufficient staff to assist customers, appropriate quality of service, a continuous stream of ideas to improve its operations.What better way to measure a smooth customer flow than to lay in a computerised system which will track the stock, deliveries and all the processes from start to finish. This would require significant investment, but would have the benefit of eliminating human error and reducing overhead (by reducing the number of staff required to fulfil the function).Whilst this would affect staff morale, a programme of empowerment should be implemented unite with a proce eds scheme or effect measurement which would motivate the staff to achieve their individual and the organisations goals.A Total Quality care (TQM) process should be implemented, the characteristics of which aremeeting the needs and expectations of customers, covering all parts of the organisation, including every person in the organisation, examining all costs which are elated to quality, particularly failure costs, getting things right first time, developing systems and procedures which support quality and improvement, developing a continuous process of improvement.4Using a process flow chart (similar to that shown in Appendix 2) would help to clearly identify what happens during the operations process and therefore show up the problem areas. Input-output analysis could be undertaken. Further analysis could be carried out using scatter diagrams, cause-effect diagrams and Pareto5 diagrams.The issue of the limited daily processing capacity could be improved with the purchase of ad ditional equipment. Additional quality checks should be introduced into the process in order to eliminate time wasting through re-sorting the product, and the down time of equipment. This could be done through benchmarking or other continuous improvement mechanisms. According to Deming the PDCA6 (plan, do, check, act) cycle should be used, alternatively business process re-engineering which has been very popular recently. That isthe fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in the critical, contemporary measures of performance, such as cost, quality, service and speed.7Although this has been criticised as being the latest fad, as well as being an excuse for removing personnel and it could ultimately result in the loss of internal experience from the Factory.Additional preventative maintenance should be scheduled which would help settlement part of the issue of the unplanned downtime. The employment of an additional maintenan ce person would also speed up the process.The issue of bespoke packaging of the product for the customer should be debated within 2the management team. If uniform packaging is introduced, this could result in a reduction in costs. However this needs to be 3carefully weighed up against the customer needs and ultimately deciding not to purchase from the Factory. A customer quality survey could be conducted in order to ascertain the possible effect of this suggestion.The supply chain is also a critical area for the Factory to keep tight control on. According to Waller8The supply chain is a labyrinthine network of suppliers, manufacturers and distributors whose ultimate objective is to provide goods and services to the client in a timely manner. The reliability of this supply chain depends on all the heap in the network, plus the reliability of all the equipment employed including transportation vehicles, sophisticated machines and computer based information systems.The use of contrac tors is a major issue that needs to be addressed. Formal contracts should be drawn up setting out the conditions of the relationship (if it has not already been done) with penalties for missing certain key targets being made. thoughtfulness should be given to the Factory acquiring its own transportation, storage and packaging facilities.By focusing on the JIT (just-in-time) approach within the operation, it may further improve and simplify matters, as, according to Slack et al9JIT is a disciplined approach to improving overall productivity and eliminating waste. It provides for the cost effective production and delivery of only the necessary quantity of parts at the right quality, at the right time and place, while using a minimum amount of facilities, equipment, materials and human resources. JIT is dependent on the balance between the suppliers flexibility and the users flexibility.The need to keep a close eye on inventory is essential for the Factory, and to keep it as low as po ssible, thereby freeing up essential funds for other areas of the business.The Factory needs to address all of these issues as a matter of urgency. Some of the recommendations identified here would involve capital investment. Therefore, further analysis would need to be undertaken once the necessary financial information is available, in order to present a robust business case to the parent company. The Factory needs tosecure essential increases in productivity (which) requires the combined efforts of all functions. The increased use of technology has resulted in maintenance making a major contribution to the effective efforts in most business10)In addition to the problem areas identified above, there are other areas that could be improved in the future, and these are mentioned in the following section.6.Further RecommendationsPurchasing is an area that is significant to the business, as Slack et al11)suggestspurchasing at the right time and in the right quantity can impact on the o perations performance in terms of delivery, speed, delivery reliability and flexibility.A separate review of the purchasing process and department should be initiated at some stage.Undertaking a financial review may also identify further improvements or reductions within the business (environmental, taxes, transportation and fuel costs). Using forecasting tools such as qualitative and quantitative methods to more accurately predict risks, time horizons, and economic indicators could also identify further areas to improve.Other problem areas that may be addressed include the environmental influences on the Factory. It should be possible to produce product all year using the poly-urethane tunnels that are seen in the countryside. The use of such tunnels would cast up the growing period and lifecycle and allow pea production to take place all year, without the peaks and troughs that are currently happening. Further, if the organisation wanted full control of its entire process, then p erhaps it should consider the acquisition of land to produce the product itself.Finally, in terms of the competition, we already know that one competitor is privately owned. In order to achieve transformational growth, rather than organic growth and consequently achieve many of the objectives identified above, the organisation should acquire this competitor. There would, of course, be issues with the merger of another(prenominal) organisation into its current business, but the increase in market share, the ability to produce more products and the access to additional equipment that this would bring, would seem to be an obvious answer to many of the problems. A thorough business case would have to be submitted to the parent company to qualify and quantify this proposal.7.ConclusionThe operations strategy of the Factory is aimed at producing quality goods, on time and to their customers exacting requirements. This is achieved at the Factory, but at what cost? A thorough review of the Factory has revealed a number of areas that can be improved.Areas such as by identifying the process through the use of flow charts, then any weaknesses can be readily identified. The three quality checks that are currently undertaken is insufficient to prevent quality issues occurring, therefore additional checks should be implemented. Computerising the operations process would eliminate communication problems and speed up the process together with reducing costs.Focusing on JIT and TQM would enhance the process further. Not forgetting staff morale. Their input is critical in ensuring the process runs smoothly, whether it is the manual or computerised method. Including reward schemes and introducing empowerment is a means of involving the staff in the process and in achieving the goals and objectives of the organisation.If the parent company is willing to invest further, then transformational growth can be achieved by acquiring a competitor, land, a haulage company and by producing its own packaging. In order for the parent company to consider this, a business case would need to be produced, justifying the recommendation.The Factory has a great number of strengths, not least of which is its location, quality product and specialist knowledge, however, by addressing its operational weaknesses and threats, it is possible to achieve sustainable competitive advantage and to continue to achieve its operational strategy, goals and objectives.8.BibliographyCheng TCE, Podolsky S (1993) Just in Time Manufacturing, Chapman mansion house (Pages 21 175)Fitzsimmons JA, Sullivan RS (1982) Service Operations circumspection McGraw Hill (Pages 7 25)Hill, Terry. (2002) Operations Management Strategic Context and Analysis, Basingstoke Palgrave (pages 184-547)Johnston, R. Clark, G. (2001) Service Operations Management, Harlow FT/Prentice abode (pages 25 73)Johnston R, Chambers S, Harland C, Hanson A, Slack N (1997) Cases in Operations Management Financial Times, Pitman P ublishing 2nd Ed (Pages 5 503)Lowson, R. (2002) Strategic Operations Management The New Competitive Advantage London, Routledge (Pages 5 158)Muhlemann, A. Oakland, J Lockyer, K. (1992) Production and Operations Management, 6th Ed, Harlow FT/Prentice Hall (Pages 63-150)Slack, N. Chambers, S. Johnston, R. (2004) Operations Management, Ed 4, Harlow, Pearson fosterage (pages 5 798)Sutherland, J. Canwell, D. (2004) Key Concepts in Operations Management, Basingstoke Palgrave (Pages 19 117)Taylor, D. Brunt, D. (2001) Manufacturing Operations and Supply Chain Management, London Thomson Learning (Pages 5 37)Waller, D.L. (2003), Operations Management a supply chain approach, London, Thomson Learning (pages 88 595)Wild, R (2002) Operations Management, London Continuum (Pages 17 187)www.cips.orgemailprotectedAppendicesAppendix 1 SWOT AnalysisAppendix 2 Flow graph of the Factory Pea Production Process1Slack N, Chambers S, Johnston R (2004) Operations Management Ed 4, Harlow Pearson Education p77Michael Porter from Lowson R (2002) Strategic Operations Management The New Competitive Advantage, London, Routledge, page 2944,5, 6, 7 From Slack et al p695-696567238 Deming from Wild, Operations Management p 6369 Slack et al p548110 Hill T, (2002) operations Management Strategic Context and Analysis, Basingstoke, Palgrave p184111 Slack et al p478