The business of Green Valley Bakers from the viewpoint of operations management - Research Paper Example

Green Valley Bakers- Summative Paper Introduction The daily activities of a business may seem to go on like clockwork, but it would be surprising to note that behind every activity and process lie a lot of thinking, experimentation and even trial and error that has resulted in perfecting the present settings that are visible across the business. Green Valley Bakers has done a lot to lift itself up from mediocrity along the realms of scientific and tested operations management, productivity improvement and quality management principles. It has looked at every aspect of the business from start to finish and has even employed process and productivity improvement and quality management and inspection experts to comment on its practices and procedures and attune them to the workings of a modern contemporary bakery on the most modernistic lines. Thus Green Valley Bakers and its owner Chez van Dough can count themselves among the best bakers and confectioners in California today. He has done everything to convert his great grandfather’s dreams into a reality. Solving a Complex Problem When you look at it, quality management seems to have evolved out of the most simple and everyday principles- yet it is so difficult to achieve. Many bakeries have failed along the way, or settled to a life and existence that is less than perfect, because they did not have the funds, will and desire to achieve the status reserved only for the best. But as Chez van Dough and his family have always believed, fortune favors the bold and those who are perseverant will eventually be victorious. The important thing is never to lose hope or give up. It would have been so easy to call it quits or throw in the towel at any of the difficult moments along the process- and there have been many- but Chez and his business have survived. They have also learned important lessons along the way. These experiences, both good and bad, will be of use to them if they are ever faced with similar situations in the future. Operations management is often a complicated process and could involve breaking down the most simple to the most complex processes and procedures to its various component parts so that the difficulties, ailments and impediments in the processes and procedures could be identified and tackled effectively. This is why dealing with the various aspects of the quality improvement process like inventory management, capacity and forecasting, productivity and process improvement and finally quality management are like solving a complex problem having many components and variables. The important thing is to decide what is best for the overall enterprise and which initiatives would have the most impact and long lasting benefits and to implement those only. Looking at the various aspects that led to the productivity and quality improvement revolution at Green Valley Bakers, we will come to the conclusion that it was the cumulative effort of the various initiatives like Productivity & Process Improvement, Inventory Management, Capacity & Forecasting and Quality Management that have made all the difference to the business. The company’s name is quite well known across California and there are orders from far and wide for their regular and specialty goods, like breads, cakes and pastries. In addition, special orders come in too for birthdays, parties, anniversaries and other occasions. Green Valley Bakers has decided to open another production and sales outlet near the city where it can sell to regular customers as well as serve as a distribution point for the region. All present factors indicate that this decision was well timed and it is leading to even greater hype and demand for its products. Indeed, sometimes customers have to return disappointed when stock runs out of various items. There is even the possibility of booking special orders in advance via Green Valley Bakers website so the bakery is never at a loss for business. In fact, there are plans to expand in adjoining States as soon as funding can be accomplished. Chez is ever grateful to his father Raiz van Dough and their mutual friend and mentor in France, Monsieur Mattieu who taught him all that he knew. It has helped carve out a future for his family and a niche for their business. No one else in California bakes bread like the French do. The Concept of Satisficing and Choosing Among Mutually Exclusive Alternatives You will note that we have indicated that the transformation process was not easy. Indeed, sometimes there were too many things happening all at once and Chez and the rest of the workers would feel the pressure of these new challenges. Circumstances could arise where concentration in one area could result in a lack of attention to another aspect, with the cumulative effect or result being less than expected. But in time, Chez and the other workers have learned to balance the various demands and adhere to the standards put on them by their clients and the quality standards process. They now have to live up to these revised expectations every working day of their lives. Life could have been simpler but it would then not have been quite so rewarding. The insignia and logo of Green Valley Bakers is becoming more and more recognizable in California and its environs, and more of California residents are demanding its breads and other creations as a staple part of their breakfasts. Indeed, production and inventory statistics indicate that the business is breaking new records every month. Sometimes choosing one route would automatically mean giving up another and its attendant benefits, as there are invariably both time and cost constraints. But you would know if the decision made was a bad one if a problem came up again to be addressed. So it is important to study both the short and long term implications of a business decision before it is made. Given the constraints of time, money and other restrictions such as legal and technological, we often end up satisfying or having to choose the best among different scenarios and alternatives. As I have indicated, a little foresight and proactive effort is all that is needed to deal with this aspect. It is quite likely that the organization and its management are already practicing techniques of forecasting and what-if scenarios and would be well used to thinking along these lines. Herbert Simon called this satisficing. The word itself is a combination of ‘satisfying’ and ‘sacrificing’, which is exactly what is implied here. Economic and time constraints put boundaries on our thinking, and we make the decision in an atmosphere of bounded rationality. As such our decision at a certain point in time is dependent on our knowledge of the problem, our outlook for the future and the cost, labor and time involved as compared with the benefits that accrue or the disadvantages that are stymied by carrying out the activity. It is also worthwhile to mention here that taking a specific decision to commit time and resources to a specific activity precludes one from taking other decisions that might be alternative ways of solving the same problem. This is the idea behind mutually exclusive events or alternatives- you can only choose one, so make it the best or that which gives the most benefits in the current and long term scenario. Issues Regarding Productivity & Process Improvement Let us now move on to issues concerning the productivity and process improvement initiatives at Green Valley Bakers. It has been suggested that to improve productivity, the bakery should move from handmade baking processes to automated production, by investing in a small automatic baking plant. The workers in each shift could be made in charge of a particular process and time it to perfection, also being responsible for needed inputs and outputs, ingredients etc. By combining certain processes where possible and reducing waste, further productive efficiencies could be realized. Issues Regarding Inventory Management We next narrate the changes that were initiated by the bakery as it moved towards automation of its bread making processes. While Green Valley Bakers used to pride itself on producing hand-made breads and cakes, it was very necessary to automate the processes towards the industrial variety of bread making that is practiced by the larger bakeries. It would not have been able to expand if the processes were not automated. This involved not only investment in new technology and risk of customers dropping off it the taste got affected but was not appreciated. It was also necessary to meet quality control standards and have proper space for the display of breads. Unfortunately bread is a perishable item and at best may have a shelf life of 48 hours under room temperature. It must be refrigerated in order to preserve it for a longer period of time. So the stocking and delivery of bread would have to be coordinated with the production quantity. The issue of inventory management was tackled by using and following the Economic Order Quantity or EOQ concept, which not only reduces the carrying cost of inventory to a minimum but also establishes trigger points for re-ordering once stock has reached certain levels. This must again be tied to the demand forecast and production efforts could be stepped up or down accordingly following seasonal trends. Issues Regarding Capacity & Forecasting Capacity utilization and forecasting of trends was a very necessary part of the process and product improvement process, as it meant that the management of Green Valley Bakers would know and be able to anticipate what is its maximum capacity in times of peak demand as well as be able to plan for anticipated peaks in demand as in the Easter or Christmas season. They would know how much labor and inventory is required and by stocking up in advance be insulated against unexpected price rises. Hiring temporary labor and help from culinary schools in the area was one idea that seemed feasible. Increasing the number of shifts while giving rest to staff on alternative workdays was another way that was suggested to handle the peak demand season. Issues of perishability and suggestions to refrigerate the bread was one idea suggested to extend the life of bread while in use at the home of the consumer. Another way to increase capacity for the bakery was for the owners to consider opening up additional outlets and a production facility near to the towns or cities where demand was materializing. This has now been done and the response is very encouraging. After the bakery had been automated it was determined that a maximum of five staff entrusted with various responsibilities would be sufficient to handle the entire bread making process from start to finish. They would most likely be stationed at different machines, from dough making to mixing to bread cutting and slicing, cooling and packaging. If it was decided to increase production temporarily or permanently due to seasonal or population factors, the bakery could work in three eight hour shifts, or two shifts of eight hours each preceded and followed by a four hour period of rest. Since there were 30 people working at the bakery in total, it would all depend on the level of demand and fully installed machinery and labor capacity of Green Valley Bakers. Issues Regarding Quality Management It was reiterated here that quality is never an accident- rather it is the outcome of a conscious and continuous commitment to achieving the best that is possible under given circumstances. It was suggested that error proofing the bread making process is one way that the bakery could make an improvement in its quality. This would save both time and money by reducing the possibilities of overcooked, undercooked or bad batches of bread and other items. The way to do this is to hire qualified graduates from baking schools and then train them in the way Green Valley Bakers likes to bake bread, cakes, pastries etc. Once they got used to the proper mix of ingredients and processing times etc. they could make better judgments about the readiness of the products. This would not only help ensure consistency and taste but would also contribute to Green Valley’s name and fame as a reputed quality bakery. It was also suggested that a process or efficiency expert should be called in to evaluate the current processes and make the needed recommendations and corrections. Some processes could be combined with others having no detrimental effect on quality to reduce production and packaging time. Another thing to look at is the reputation of the suppliers and the ongoing costs of materials. The bakery owners should always make sure that they have a backup plan just in case something happens that can interrupt supply from one main supplier. There could be transportation or delivery problems, whereby cost and profitability can be affected and thereby threaten the profitability and survival of the bakery. All this must be planned for in case of unforeseen problems or eventualities. It was also recommended that materials management is one area where quality control should be implemented. The Japanese concept of JIT or Just-In-Time Inventory could be implemented here to save the cost of carrying inventory as well as re-ordering costs. By establishing particular trigger points for re-order and preventing the costs of storage to get exorbitant, the owners of the bakery will be following the concept of Economic Order Quantity to its fullest with all the attendant benefits. Interactive Aspects of Operations Management As we can see from the preceding paragraphs, operations management consists of various aspects that are complex but nevertheless important to any business enterprise. Making sure that quality products and services are provided to the customers on time and within budgets and cost constraints is a key factor relating to a company’s profitability and long term survival. However these various components of operations management do not exist independently of each other, rather they interact in a real time environment which makes operations management even more complex. For example, capacity utilization and productivity improvements in processes can affect inventory levels and demand. In the same way, an increase in quality and process yields would likely affect capacity levels and stocking and labor practices at the bakery. So a change in one element of a process or procedure may have benefits or drawbacks in other areas that were not foreseen or anticipated. It may take the bakery backwards rather than forward if a compromising solution is not found. This is the job of management. However the services of efficiency and productivity experts can also be employed to deal with specific issues or bottlenecks (Besterfield et al, 2011). Mitigating and Synergistic Effects of the Various Initiatives It is no surprise to find that certain elements of the process move together and others in opposition when a change is initiated in a business enterprise. For example a rise in demand would entail additional investments in inventories and labor capacity, raising the cost of production for the bakery. These effects could be mitigated somewhat if Green Valley Bakers gets the services of baking school graduates as interns during the busy season, as they would not be given a full salary but rather a fixed stipend for the duration of the internship. However it would also contribute positively to the bakery’s image in the long run as internees often are known to apply back for jobs at the institutions where they served an internship. As the business expands and opens more production and sales outlets in other States, these internees could be a ready source of available and inexpensive labor for Green Valley Bakers. Similarly the shift from handmade to automated baking processes may have increased the productive capacity of Green Valley Bakers but it is also likely that it alienated the marginal consumer who frequented the bakery for the exclusivity of its handmade bread and other items. Deciding on which consumer segments to target like the sport conscious or the elderly or the very young would ensure the demand and supply of these items, but reduce the predictability that comes with baking the same bread for the majority of the California residents. You win some, you lose some, and you have to take the risks from time to time or you will never know. Who knows, the bakery could stumble upon the next big thing in the baking industry. How to decide what is best for Green Valley Bakers? Obviously what is of paramount importance here is to find out what really are the best alternatives to follow for Green Valley Bakers. This applies to all aspects of operations management, such as inventory and cost control, labor and capacity forecasting, productivity and process improvement and finally, quality control procedures for control and maintenance of the processes. There needs to be a synergistic fit for the desired initiatives in terms of compatibility, cost, effectiveness and ease of implementation and control. Without this, even the best plans would be difficult to implement. The owners of the business will need to come to terms with what needs to be done and will make the required efforts once they see that the benefits that are resulting are worth it. The needs of all the stakeholders must also be taken into consideration (BSO, 1996). Conclusion We have just looked at the business of Green Valley Bakers from the viewpoint of operations management and commented upon the various initiatives than can be taken in respect of quality and process improvements at the bakery. However the final decision needs to be made by the owners as to what they will implement and how it will be done. References Balanced Scorecard Organization(1996).Handbook for Basic Process Improvement. Retrieved on 13 Oct 2011 from http://www.balancedscorecard.org/Portals/0/PDF/bpihndbk.pdf Besterfield, D; Besterfield, C; Besterfield, M; Besterfield, G; Urdhwareshe, H & Urdhwareshe, R. (2011). Total Quality Management, 3rd Revised Ed., Pearson. Read More