Issues Being Faced by Achiff Snack Foods - Essay Example

? Case Study :Achiff Snack Foods by Word Count :2821 Contents Introduction 3 System and Operations Management 3 Input Output Process Model 3 The Four V’s Of Operation 4 Volume 4 Variety 4 Variation 4 Visibility 5 Decision Making Hierarchy of the Firm 5 The Role of Systems 6 Pareto Analysis 6 Current Issues being faced by the Organisation. 7 Recommendations 9 Possible Issues with recommendations 12 References 13 Introduction The case study deals with Achiff Snack Foods. The company deals in the production of French fries and other potato related products. The operations of the company were pretty smooth till the time they had introduced their own lines of products. The production lines as well as the warehouse facilities ran smoothly till that time. However the introduction of 8 different kinds of products has caused a lot of difficulty in operations and warehouse management. The company is also facing some problems with their logistics providers who fail to deliver the product on time. System and Operations Management Input Output Process Model An Input output process model may be defined as the graphical representation of all the factors that makes up a process. (Arora, 2004)This model describes all the materials and information which is required as input for the company, the various processes involved in converting these inputs into useful outputs and the outputs delivered as a result of the operation. The model represented above presents the input, output and process model for the company which we are dealing with The Four V’s Of Operation The 4 V’s of operations are volume, variety, variation and visibility. The study of these four can help a firm to decide what kind of operations need to be done by them. (Bamford, 2010) Volume Volume is concerned with the fact whether the company produces a few specialist items of a lot of items of the same type. Achiff snack food has been a volume related company till now. They produced French fires in bulk volumes and send them to the fast food outlets and supermarkets for sales. However the situation has changed drastically with the introduction of Achiff Idaho branded products (Bergvall-Kareborn, 2004) Variety Traditionally the company focused on only 1 variety of product – French fries but this situation has changed and the company is now engaged in the production of 8 different types of products. This has led to various operational complexities for the company. (Voss, 2002) Variation Variation refers to the unpredictability of demand. Achiff faces a large amount of variation. Their largest business provider – Kelly is known to cancel orders at the last moment and also change quantities often. The fast food chains also require flexibility in delivery... Due to these variations; it is difficult to manage operations and warehouse activities of the company. Visibility The visibility of the process of product making is quite to the client. However they still interact with the client on a daily basis regarding the demand reduction or increase. Due to this interaction visibility of the firm increases. At present they do not have a dedicated customer service department and depend on the sales people to handle customer complaint calls. This uses a significant amount of time which could have been used for procurement of new orders. Thus in a nutshell we can summarise the four V’s in case of Achiff as follows – Volume High Variety High(8 different products) Variation High Visibility high Decision Making Hierarchy of the Firm The decision making hierarchy of the company has been shown in the case study. However the important point to notice here is the influence of certain people in making decisions which can be critical in the smooth functioning of the operations o the company. From the case study it is evident that too many decisions in the operations team are left to Tom who is the operations director. The operations team is not able to function effectively without him. Even the warehouse team is dependent upon him to make important decisions which can improve their warehouse operations. The CEO has an important authority in the company and has an important influence in deciding the future path of growth for the company. It will be his decision whether the company focuses on Idaho branded products or the current business of giving French fries to other companies The Role of Systems The company has at present 3 lines for production of various products. The main problem right now is in the new hash brown area which is also being used for the production of Achiff line. This area needs efficient scheduling. As far as IT systems are concerned the company has effectively managed finance and HR though sage systems. However the system for setting out production schedules and warehouse management is not up to the mark. The former is suffering due to heavy reliance on its director Tom Graham. Another problem being faced by the company is non-integration of the various processes. Sales and marketing people are using an altogether different system of forecasting than being used by production and warehouse people. This causes a lot of confusion and human dependence. Pareto Analysis Pareto Analysis is the 80:20 principal which says that 80% of problem in a firm are caused by 20% of the issues. (Checkland, 2006)In order to do Pareto analysis for the company we will use the chart provided which informs about the customer complaints. On the basis of the chart provided this is the Pareto analysis of the chart Thus we can see on the basis of Pareto Analysis done above that out of 8 problems which are reported by customers 70 % of the problems are reported from the first three issues which are too few items sent, too many items sent and late delivery of items. Late Delivery of items is largely due to their logistics partner FreshDist which picks up deliveries late. The problem of inappropriate number of products send to the customer is a more serious concern for the company as it requires a complete analysis of the operations of the firm. Current Issues being faced by the Organisation. The main problem in solving an issue related with operations of the firm is to identify and define the problem itself. In order to do so in respect of the present company we will use the soft systems methodology which recommends developing root definition or conceptual models for each of the issue being faced (Haynes, 2008).CATWOE analysis can be sued in order to prepare comprehensive root definition models. CATWOE is an acronym for Clients, Actors, Worldview, Owners and Environment. A CATOWE analysis of the above firm can be done as follows – Client: clients or customers in the present case are the fast food outlets, supermarkets and the retail customers who are consuming Achiff branded products (Karuppusami, 1988) Actors: Sales and marketing team, the operations team, warehouse team, HR and finance team and the logistics partners Transformation: The Company purchases potatoes from farmers, stores them, processes them using the production lines available to the company, refrigerates them and then transports them to the different customers of the organisation. (L. Chan, 1998) Worldview: the most important worldview in the present system is that the company exists in order to increase the benefit for the shareholders and the owners of the company through the business. Although production and warehouse people may not want to increase the product range but it should be done if it increases the profitability of the company in the long run. Owner: The owner of this company is Gary Achiff Junior. He is the CEO and the son of the person who started the company. Thus his vision will be more important than the thoughts of others. (Lewis, 2003) Environmental Constraints: The Company operates in a number of constraints at present. The constraints are the limited number of production lines which the company has .The differences between the two shift managers which is leading to reduced production output for the company and the problems being faced with the logistics partners by the company. Thus after analysis of the problems using the CATWOE analysis, we can it’s down the main issues which are being faced by the company as follows – 1)Client Difficulties – The biggest problem that the company is facing right now is due to its client – Kelly .Kelly’s is the biggest client for the company but due to the bulk orders placed by it has used beaten down the firm many times on pricing. They are also difficult customers when it comes to demand forecasting. The company reduces or cancels orders at the last minute and also makes changes in the quantity demanded. This makes it very difficult for the company to plan ahead and leads to over or under production. The second type of customers are the own branded stores who are difficult to manage because of the price discounts that they want to be given. 2) Logistics Problems with FreshDist: Pareto analysis which has been done in the previous section shows that late order is one of the top 3 problems which the customers of the company have reported. One interesting thing to note here is that this is a problem which is caused inspire of outsourcing the logistics to a third party. This means that the logistics partner FreshDist has been unable to fulfil its obligations. The change in production schedule caused due to customers has to be accommodated by the company but there seems to be no reason why they are putting up with the problems caused by a logistics provider. 3) The New Product Range – Achiff Idaho Product range is the new line of products which have been launched by the company .These are retail products and are sold under their own brand name. However these products have completely disrupted the production schedule of the company. The company has limited production lines and it is becoming increasingly difficult for them to accommodate these new products in the existing product lines. As the variety of products has increased the operations team has to run set ups for each type of products. This causes the company to lose valuable time and causes delay in production. 4) Storage Difficulties – The Company also has warehouse which is used by them to store the raw materials required for the products and also the finished goods before they are shipped out. This warehouse has limited storage capacity and the whole storage patterns gets disrupted due to frequent change in demand by the customers and the negligence of their logistics partner 5) Employee Problems – The two shift managers of production are at loggerheads with each other due to difference in their approach. They have vastly different method of doing work which is causing a lot of tension in the production and causing delays in the work. This issue needs to be sorted out to run the production line efficiently. Recommendations Although the company has been facing numerous issues at present, all these issues can be easily sorted out through a focused approach. The first and the foremost thing which the company needs to do are to clearly lay out the future growth strategy for the company. Is the company satisfied with being a supplier to fast food joints and super markets or does it wishes to enter the retail market through its own branded products. The CEO has already made his decision in favour of the latter. He has said this is the way forward for the company. This should be communicated to all the employees in the company so that everyone is on the same page and there is no difference in the priorities The logistics partner who is being used to deliver products to own branded product customers is not delivering the desired results. This partner should be changed immediately by the firm. As we have seen in Pareto analysis; late delivery is one of the major problems being reported by the customers. This can be easily solved if the logistics partner takes delivery of the orders on time. Outsourcing of the Warehousing Facilities – The Company is basically a manufactures and it should not deal with the warehousing issues by itself. This adds to the complexity of the problem. Earlier the company was involved in making products for other firms; this made having warehousing facilities important. But the company is slowly moving forward in the retail business due to which marketing efforts will be more important. The present warehouses of the company can be leased out for a rent or sold off. The company needs to invest money in a new production line. As is evident from the case study the present capacity of 3 production lines is unable to handle the huge variety of products that the company has started producing in order to enter the retail market. The older production lines should be left untouched and should be dedicated to the earlier clients and businesses which were being handled by the company. The new production line should be made in such a way that it supports various varieties of products without causing too much downtime. The money earned through selling of the warehouses can be utilized by the firm for increasing its production capacity. The most important thing for streamlining production is to sort out the management problems of the operations team. Although the operation director has been a valuable asset for the company but his absence in this crucial time period can be damaging for the firm. They should hire a new operations director who can take care of the employee problems and is available for service .The two shift managers need to be informed about the priority of the company. Till the new line is in place, their focus should be on making the products as quickly as possible. The focus should shift back on quality as soon as the new production line is operational. The main problem with the marketing team is that the marketing director is not fully convinced about the viability of the new Idaho branded product lines being floated by the company. Marketing to institutional customers is entirely different from marketing to retail customers. These two require different approaches. In view of the importance being given to the new branded products being introduced the marketing department should be divided into two parts – one focusing on institutional customers and the second focusing entirely on retail customers. This will require two marketing directors directly reporting to the CEO of the company. Better IT systems are needed by the company then which are being used at present. Keeping in view the likely surge in business in future the company needs to augment its IT infrastructure. Software needs to be bought which integrates Marketing demand forecast, production scheduling and warehousing requirements in an integrated way. The present system requires a lot of human intervention and is prone to errors. Streamlining the system will reduce a number of over delivery and under delivery problems being faced by the firm. The marketing team is the one which is looking after customer complaints. Thus valuable time which can be used to source new business is being wasted on customer calls. This process can be outsourced by the company .The outsourced company will attends all the calls related to the problems being faced by the customer and inform the concerned department about the complaints. This will free the marketing division from handling customer complaints. Possible Issues with recommendations The above said recommendations will bring wide ranging changes in the way business is conducted by the company. These changes will result in a number of issues which have to dealt with effectively by the company in order to ensure that the effort does not fail .Some of the issues likely to come up and the method for their resolution are as follows – Difficulty in finding of new logistics partner and resistance to change within the company. As we have seen in the case study there is a resistance within the company in finding a new logistics partner as it will be difficult to find a partner which can provide cold storage facilities .However the company will need to scout a lot in order to ensure these needs are fulfilled. There will be opposition from the employees regarding outsourcing of warehousing facilities. Major opposition to this plan will come from the production and marketing team. The production team will allow the outsourcing to take place when they are provided with the new product line; however the marketing team needs to be convinced more effectively that customer service wills not b effected due to this. Recruitment and Training of new employees – The Company will need to hire new employees and also train them according to the above recommendations. This training will cost the company and there will also be a period during which they will be in the learning curve and not perform to their fullest potential. Familiarity with new IT systems – We have recommended the installation of new IT systems which will streamline different departments. All employees will need to be trained on these systems which might cause a temporary drop in the production of employees used to the old way of working before the benefits of technology start being seen. References ., C. (2006) Operations Management for Competitive Advantage,11th ed. London: Tata McGraw-Hill Education, p.350 - 358. Arora, K. (2004) Production and Operations Management, New Delhi: Firewall Media, p.1 - 10. Bamford, D. and Forrester, P. (2010) Essential Guide to Operations Management: Concepts and Case Notes, New York: John Wiley and Sons, p... Bergvall-Kareborn, B. et al. (2004) Basic Principles of SSM Modeling: An Examination of CATWOE from a Soft Perspective, systematic Practice and Action Research, 17(2), p.55 - 73. Checkland, P. and Poulter, J. 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