MASTER OF BUSINESS ADMINISTRATION

AWARDED BY NOTTINGHAM TRENT UNIVERSITY

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MANAGING OPERATIONS STRATEGICALLY (MOS)

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16.08.2009

Assignment Form
MBA Jan04
EXECUTIVE SUMMRY

As the Operation Manager, I had done a thorough investigation and some analysis
into the daily flow of operation of the company. My finding was significantly about the
wastage, the defected products as well as the recall of the finished products. This is the
failure in the process of input that includes every step in the process of producing the
required output. A products Life-Cycle analysis has been done towards reaching the
source of the problems. Where it was found that the products also have been in the
market for five years and it has been the same since then. A facelift have to be done to
capture the market shares and the users’ demands.

On the other hand, I found that the wastage and poor quality of output has been occurred
in the frequent event of machine breakdown. My action of proposal was to scheduled as
monthly maintenance procedures which will consists of a series of testing and minor
overhauling.

Another finding was in term of inventory controls and management. Where it was found
that, the inventory was merely in our optimum need. The perfect suite for catering it is by
using the ‘Just In Time’ (JIT) methods of inventory management. For that to happen
certain factors have to be taken into consideration. Where Kaizen term will appears to be
one of the main factors of determining the smooth flow of JIT process. I will further
discussed in the body of my presentation.

The last element that has been contributing towards the failure of the operations was the
poor flow of materials, products and people that has been working inside the plants itself.
I was thinking of implementing the ‘Lean Principle of Manufacturing’. It is vital towards
diminishing the problems factors.

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Table of Contents

Section Page Number

Introduction 3
Analysis of Problem 4
Solution Proposal & Cost-Benefit Analysis 6
Conclusion 11
References 12

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INTRODUCTION

This proposal is directed precisely to The Managing Director and to the Boards
of Directors. . It is in regards to the poor performance of the company as a whole with the
concerns of the operations department itself. As the Operation Manager, I have been
doing an analysis on the overall performances and flows of the operation since day one.
With the references to the historical record kept in the office and interviews with existing
employees. I can give you and the board the big picture of what is going on here thus
creating a poor result in the operation performances. From the study, it was identified
that, the major causes that contributed to the problem is product defects, product recalls
and wastages. On the other hand, the products are already five years in the market, where
every factors and characteristic remain as it was on the débuted. So, the competitors have
changed the packaging and so on. It is to adapt to the demand of the products by the
users. If we failed to cope with that, how can we stand the competitions with our
competitors? This is also due to the frequent events of machine breakdowns. The
occurrences none the less create a seizure to the operation to frequently. Lots of
unfinished products been hanging around the operation flow that being a contributing
factors towards the defected products. Poorly arrangement of productions flows also set
to create the over capacity of the machineries in used. Maintenance is also an issue here.
Where it was found that it has been years since the first full services maintenance was
recorded. With poorly trained machine operators, the machine could not be operated as it
should be. Only few of them have few training on their early years in services. No follow
up training up once then. A series of inspection should have been done throughout the
years. However the record book is there with empty pages. Apart from that, it was also
found that the inventories were poorly managed and control. Some parts that should not
be there are there. Some that is on the list were not there. This must due to poorly
forecasting of the productions as well as the price of the inventory itself. Sadly to say
that, machine inventories and productions inventories are mixed up. We should have
different space for that different used of inventories. May be quantity assurance is an
issue here. Where, the purchaser failed to make a good calculation on the needs for such

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inventory. Pilferage also must be another contributing factor here. We should address to
this matter once and for all. Everything should be in order before the operation could take
place. Poor flow of materials, products and people within the manufacturing plant is also
playing some role in contributing towards these problems. We need a new job design as
well as control on the flow of peoples and other resources especially the materials.
Hence, the problem must be resolved.

ANALYSIS OF THE PROBLEM

a. Products defects, products recall and wastages

Products defects usually occur when there are slacking in the process flow. Where
as the flow were interrupted, it will most probably caused an operation seizure. Thus
making the work in progress (WIP) hanging around the productions line. The risks are
where some of the component is not environmentally proof. Which mean that it has to be
installed as the finished products on the same day, if not it will ruin some feature of the
products.
In the mean time the quality control team is not keen enough to detect any defect
on the products before being sent to the end users. Thus it will tend to create another
misfortune to the company, which is the products recall. The event could costs us more
than sending the products out. This is due to the fact that when we sent it out, we sent it
in bulk or in mass packaging. However, when the product are recall, we tend to spent
more on transportation costs because of the varieties of location of the products being
sent as well as timing concerns.
When that all happens, it actually will creates wastages. Wastages in reference
from LEAN INNOVATION web site can be define into 7 types. In the case of our
operation, it was found that we were over produce in term of the capacity of our
machinery. When it happen, we tend to overlook upon the quality of the products finished
for shipping. Therefore, the second waste arises in term of waiting time. Where, we tend
to spend more time than the scheduled one. Hence it will cause the third waste of having
to recall back the defected product which consists of transportation costs on the products
movement. On the other hand, when we are over produce the goods, we tend to have an
excessive inventory in hand that have to be stored somewhere. With a little space to

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operate in, we are stuffing or products in a tight space. Thus it will also cause the defect
on our products. Another thing is that we are doing our productions the long way. Where,
some process is unnecessary for the production line to finish up the products. For
example, putting the screws and tighten it up, should enough being done by a person
rather than three person doing it. When that happens, some areas in the production line
are too crowded with fewer things to do and some are to much things to do but, with less
people.

b. Frequent machine breakdowns

In term of machinery, it was also a factor to be taken into account. Where it was
frequently runs in over capacity on it usage per day and per week. With lacks of training
to the technicians and the machines operators, the matters could become worsen. No
maintenance was made during that time. How come we can expects it to work properly if
it is not well maintained.

c. Poor inventory management and control

When we inspect the inventories in the store, we can see everything is not in
order. No proper recording and tagging done to ensure the smooth movement of the
inventory as well as keeping tracks on it level of usage. Too frequent the order was made
with no control from the manager in charged. No check and balance were done. Inventory
for machines and inventory materials for productions were kept in the same place. Sadly
to say that it was poorly organized. After a simple self audit were done, it was found that
some items listed in the inventory checklist are not there and some items that should not
be there are there. No strict control on the movement of materials and other inventory at
all. These tend to create problems in term of movement of stocks, malicious ordering,
uncontrolled withdrawal of materials and perhaps pilferages.

d. Poor flow of materials, products and people within the manufacturing plant

The production line is also having a bad chokes at some areas. The line seems to
move but, the failure is on setting the materials to be used in those certain areas in the
line. There are no extra bin to swap when the bin in usage are emptied up. There are also

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slow in the movement of the finished products to the storage area from the end of the
productions line. It seems that the workers are not that motivated to works in required
pace. Lack of discipline is also an issue here. They come and go as pleased when the
productions are in progress.

SOLUTION PROPOSAL AND COSTS BENEFIT ANALYSIS

Quality
From my opinion, to improve the quality of the products we must first look at it
life cycle. Where the products is in the 4 stages of it life cycle? It has been 5 years old in
the market. Usually at this age, we tend to produce in mass production. In the stage of life
cycle, our products are at the maturity stage. At this stage we tend to be overcome by our
competitors in term of products quality as well as it pulling effects. To create life span
products, we must first consider a paradigm shifting. The way we look at our products
must change through the eyes of our consumers. We should make minor changes on the
products so it will be more competitive and attractive compare to our competitors. We
can called it product re-engineering. A simple research and development process would
help much in the process.

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Product Life Cycle

Chart above are showing where we are at this moment and we are been doing at
the moment. It shows that our competitors are doing very well by taking the
advantages of our poor performance at the moment. However, there are still hopes
that we could get back on track as soon as possible. Research and development
should emphasize on producing our products with no mistakes concepts or
“POKA YOKE”. A Japanese term for making a product that is user friendly.
Thus, it will tend to avoid inadvertent errors. This concept should also be
implemented in the flow on operation itself. The less mistakes done by the
workers the more quality products will be resulted from our productions output.

In doing so, I am setting up a new standardize and simple assembly line in order
to minimize errors. Production flows will be re-organized in such way that each
worker is equally distributed with inventory materials and doing the same loads of
work or tasks. Each line will be divided into 4 sections. Where, each section will
be check for quality screening before entering the next section. The supervisor
will be trained to act as the Quality Control Officer apart from looking after their
subordinates. While doing so, they will also responsible for refurnishing the
materials needed in their section. Dual bin concepts will be implemented in order
to smooth up the flow of operation. Which mean that material used will be put in
two bins, one in used and the other one for stand by if the first bin is emptied up.

All the action taken above will help us reduce the deadly wastages that we are
occurring right now. We will be saving on over productions due to market
forecasting as well as research and developments activities. A good
communications with every department are vital to ensure that we are selling our
products. Research teams must tell us what we must produce. After that the
marketing team must also know our capacity and the products features in order to
market it. The data collected from them will be translated into how much should
be produced and in time. Apart from that we will only stock a minimum inventory
in such manner what we need only we are using. Here, Just In Time (JIT)

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 inventory purchasing and ordering will play a vital role. We don not have to order
too much or too less anymore. We will be synchronizing the inventory flow with
our suppliers as well as the purchaser. We will also be focusing on the
housekeeping of the plants itself. In this term, we will take the concept of 5S as a
reference. These concepts help us to classify the wanted and the unwanted stuff in
the plant areas. So we could get rid of the unnecessary things. Then we can
arrange the wanted things in order so we can easily reach them. By doing so, we
also can arrange our workplace in such order that is simple enough to complete up
the productions process. Since we are doing all that, we are also need to maintain
the standards of that particular environment at all time. Thus it will tend to
educate the workers on the good habits and higher level of disciplines

Eliminating the unnecessary steps in the productions line will help lessen the
motion of the workers, they will only do as they are told by the supervisor.
Relocation will only happen when there are accesses in workforce in certain area.
Overall planning will help to zero-rise the products defect in a minimal value.
Improving needs a long time to be achieved actually. Here we can take the
concept of kaizen as a reference. This concept insists on a continuously improving
the process of doing thing bit by bit in order to reduce waste. The mindsets have
to be change not by spending more money.

To cope with frequency of machine breakdown, we will a minor overhauled in the

machinery and scheduled a weekly inspections starting this month. The
technicians will be sent for training to recoup themselves in terms of experience
and knowledge. They will be more aware of what they are doing and fast on
reflect towards avoiding any mishaps from occurrence. No mishaps means no
more seizure in produc6tion flow.

Inventory Systems

As we talk earlier, inventory is an issue. How to achieve efficient and effective

management systems? Now we are rather using an orthodox management system. Where,

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everything is not in order. An automated systems and data base technology should be put
in used here. Therefore the IT department should set up a computerized system to cater
for the stock level of inventory and re-order level of materials. Every inventory will be
scanned and the data will be stored inside the master computers. Such action will help us
identify when to order ands how much to order. We can also link the data with our
suppliers. For that, they can prepare the needed stock in time our order is made. Check
and balances will take into action here where the purchaser makes the order and it will be
authorized by the operation manager or assistant manager.

From here on we can achieve an effective and efficient inventory management

system by focusing on the Just In Time methods of inventory ordering. We are fortunate
enough to have the inventory suppliers’ close by. It will help us coordinate the materials
needed accordingly to our manufacturing needs. It will tend to reduce our cost of storage
and slightly diminishing the risks of material gone bad and so on. With the computerized
system that will be implemented to the inventory store, it assist us in triggering the
minimal level of our inventory held. This is where the system will be link to our suppliers
directly. When the level is at minimal point, the system will send a signal to the
storekeeper as well as the suppliers. The storekeeper will tell the purchaser that will make
the order and the manager will authorize it. When ever the suppliers get the signal from
the system they will get the material ready for shipping. Once the get the order they will
immediately shipped it to us within required time. This is what we call the supply chain
interrelationship. A good rapport will be done between us and our good suppliers so that
we will at all time get what we ordered.

Improvement of Flow

As we implemented the Lean principle of handling materials which consist of

Kaizen and the 5S’s, we tend to get rid of the unwanted items and can concentrates on
what we need only. The implementation of JIT in the inventory systems also help the
smooth flow of our materials input to create a non-defect output as we required. Materials
will be organized in such way that is easily to get and with good clean space to move
around.

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 At the end of the process, the finished products will be sent as soon as possible to
the merchant that ordered it. This is due to the well planned supply chain with the help of
the well dependable computerized systems. The data collected from marketing
department as well as the inventory or store department is vital to coordinates the flow of
our finished products. When the information is gathered, we can organize the shipment
for our products in just minutes of time. Who will get it first and who is next in line.

With the discipline implemented using 5S, every body will have their own
workspace with comfort of doing it in the most productive way. Cleanliness as well as
well organize workspace is their motivators to be productive. This also will be achieved
by the setting of our new productions layout.

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Chart above tell us the flow of the operations in our plant. When data was collected from
the marketing or sales department combine with the inventory department in the data
based systems, the suppliers will be notified on what we need in our plans for
productions. Then the materials will be transferred to the production line for assembly
and other process required making our finished product output. At the end the products
will be package and ship out to the merchant and end users. Productivity will tend to arise
when every factor are equipped. Material, process and people well organized in the plant.
The involvement of staff in the planning of the layout is also the factor that help raising
up their morale to performs better. Better performance means better productivity with
lowest risks of output going defect. With that the manager will get control on the working
area with the eyes on every factor determine non-defected products with the visibility of
satisfying the consumers need.

CONCLUSION

These operations need a facelift to ensure that we could keep our reasonable
market shares as well as compete with our competitors. A good well manage productions
line is vital to achieved all that. With the help of newly design products and new
computerized systems, we could make it for another 10 to 20 years in this business. Data
base and good communications between every people in the company is vital to succeed
what we have targeted for. A total Quality Management that consists of 5S, Kaizen, JIT
and The Lean principle of handling things could the factors of our success.
All in all, we should plan a head of us, see the future and should be able to predict
what will happen then. By that we could be more prepared to face the challenges in the
real world. Only the well equipped company will survive. And that is what we are doing
right at this moment, preparing for the future.

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References :

1. http://www.leaninnovations.ca/seven_types.html 7 deadly wastes , © 2003 LEAN

Innovations
2. Antti Sääksvuori, Anselmi Immonen, 2005, Products life Cycle Management,
Springer
3. http://www.siliconfareast.com/pokayoke.htm , POKA YOKE & 5S
4. John S.Oakland,1989, TQM & JIT, Butterworth Heinemann
5. vollmann,Berry,Whybark, Jacobs Irwin, Manufacturing Planning and Control
Systems, McGraw-Hill

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