Value Chain Analysis for Battery Manufacturing Business - Essay Example

Project Management-Scenario Assignment Table of Contents Table of Contents 2 Introduction 3 Risk Profile 3 Preparation of a disaster recovery plan against some possible hazards 7 Value Chain analysis for battery manufacturing business 10 Introduction Risks are part of our everyday lives as well as part of operations of private and public organizations. Risk in an organizational concept may be defined as a negative and in rare cases positive deviation from the expected outcome due to uncertainty effects on objectives of the company. It is a critical issue in management and must be dealt with effectively and competently otherwise, it might be the of a company’s downfall. Thus every organization must ensure that they incorporate risk assessment into their project management processes for achievement of corporate objectives and to maintain profits and competitiveness. Measure of the extent to which a company’s benefits are achieved is known as value and this should be at optimum cost. As a manager of the battery manufacturing company, Bart Erry Ltd, I would employ risk management and assessment for evaluation of risks in order to take remedial actions in line with achieving these benefits and minimising loss of value to hazards and uncertainties. Risk Profile Risk profile is a defined set of risks that an organization is exposed to and describes when a risk should be considered acceptable as well as how the risk is affecting decisions of the organization and corporate strategy (Woodhead, 2001)1. Risk profiling involves outlining the risks according to priority and can be developed during risk analysis and used for the management of these risks. It enables the company to measure the likelihood of the threats occurring and the extent of disruption that can be caused by each type of risk. Profiling hence involves identification and quantification of risks where identification is simply finding or recognizing a particular risk that could affect the organization in achieving its goals. While in quantification the identified risks are evaluated and a data developed to help in outlining a disaster recovery plan (Loosemore, Raftery, Reilly & Higgon, 2006)2. The battery manufacturing company, Bart Erry Ltd are currently facing a number of risks such as legal suit may be filed against them by the local community because of the chemical effluent which found its way into the river and killed fish. They also face relocation from their current location by the government. They as well face health hazard risk not only to the local community but to the company too because they may also depend on water from the contaminated river for several uses. The company may also face destruction of property by the angry local fishing community whom have been affected because the effluent from the company caused the death of fish that they depend on for livelihood. Furthermore, the company sale are low and the company is at risk of losing its shareholders due to introduction of cheap similar product in the market by another company as the shareholders feel that they will not get any value for their investments (Dallas, 2006)3. It is therefore necessary to outline the risks and arrange them according to the level of importance and take appropriate actions against them in order for the company achieve its value. The most critical risk here that should be given priority is the health hazard risks because chemical effluents finding their way into the river and even causing death of fish that was in the river is a great environmental concern that can cause legal battle with environmentalists. This risk can be classified as high just like the economic risk of sales going down (SAVE, 2007)4. However the risk of destruction of property and relocation is quite low since the company employs a number of locals who fear that they will loose their jobs if they cause commotion and also since the local authority are barred by the law from forcefully relocating the plant. In order to manage these risks and make appropriate decisions on how they can be prevented from causing damage to the company, a quantitative assessment of the risks by determining the probability of occurrence is best achieved by the use of a risk register. A risk register is a form of management tool that is commonly used in organisational and project risk assessment, and allows the organization to determine and understand its risk profile. It includes information about the risk such as the risk type or category, the risk probability, description of the risk, impact, risk owner, counter-measures, status of the risk and so on depending on the type of assessment the organization is doing (Vose, 2002)5. Risk Register for Bart Erry Ltd. Risk Category Description Probability (in %) Impact Counter-measures Environmental Discharge of effluent into the river Pluwer 60-70 Causes death of fish and lose of livelihood for the local fishing community Ensure there are no leaks from the storage tanks. Clean the river so as to get rid of the chemical contamination. Competitive Presence of cheap products from other companies in the market 50-60 Low sales, loss of revenue and company might end up losing a section of customers to the cheap products Produce distinct high quality products which even if expensive people will still buy. This will create an identity of quality for the company. Carry out advertising and strategies to improve sales Legal The community or environmentalists may file legal suit as a result of contaminated river Pluwer 40-50 Environmental pollution causing death of fish and contamination of the river also used for domestic purposes. Bad reputation and negative publicity. Apologize to the affected local community and offer financial compensation to the fishing community. Economic The company faces loss of value as a result of low sales 30-40 This might stall the operations of the company causing downfall Counter check on prices with regards to cost of production and if possible, effect a reduction Competitive Competition from another company selling cheaper products 50-60 Results in low sales and lack of competitive advantage over other companies. Evaluate and assess the assets of the company that can be utilized to gain competitive advantage Political The local authority are thinking of relocating the firm because of environmental concerns 20-30 The company might relocate to a location where there is no infrastructure unlike the current location Convince the local authority that the spill was a mistake that will not be allowed to happen again. Social The company engaging in issues that negatively touches on emotions of the stakeholders like killing the local fishing industry. 20-30 Damages the reputation of the company. Get involved in community development activities that will help the company gain trust and confidence of the public Technological Risk due to faulty equipments and machines 35-45 Cause loss of materials, in this case, leakage of chemical which contaminated the river Acquire new equipments and ensure constant maintenance of the company’s equipments, machines and all the tangible assets owned by the company Preparation of a disaster recovery plan against some possible hazards Disaster recovery plan is a fundamental component that every company should have to help in normal continuation or its business continuity. The Bart Erry Ltd thus has to develop a disaster recovery plan as well so as minimize risks and the degree of damage when a risk occur (Cooper et al, 2005)6. As a manager of the Bart Erry, it is my responsibility to appoint a crisis management team to develop a project with strategies on disaster recovery plan. Technological Hacking: this is intrusion to an organisation’s or a firm’s website, internal systems and servers. Contingency plan Testing security capabilities by conducting friendly attacks on servers and website. Firewalling is done to prevent access by unwanted personalities. It also reduces risks by limiting user’s access to harmful sites. Response strategy You start by retracing the path used by the intruder to establish their interests. Sealing the security loopholes used by the attacker. Data loss This can happen because of a variety of reasons including: corruption of files in the software, hardware failure and human error. Contingency plan Backing up data. Creating security checks. Response strategy Data recovery centres offer retrieval services. Tracking company information access by other users to determine their motives. Environmental Flooding This is a very serious environmental hazard that brings financial and material losses to an organization. Contingency plan Construct drainage channels to direct flood waters to large water bodies. Seeking information from weather experts on predicted weather patterns. Response strategy Switch off all power ports to avoid cases of short circuits as the water levels goes up. Contact local authorities that handle floods to get expert evacuation processes underway in case of high water levels. E-waste This denotes used electronic equipment. These are made of harmful materials that if not properly disposed can destroy the ecosystem and harm humans. Contingency plan Maintaining these equipment by conducting regular servicing to make them last longer. Response strategy Using gas masks when handling these equipments to avoid infection from harmful substances used in making them. Releasing obsolete to scrap equipment dealers Environmental hazards are of high probability with a great impact because they affects not only the company but the local community as well while the technological risks are of medium probability but with high impact too (Pickford, 2001)7. Value Chain analysis for battery manufacturing business Value chain analysis is the identification of assets, activities (inputs and outputs) and resources that the company has and uses to increase its value and competitive advantage. These activities can be primary or supportive activities where primary are those involved in direct production while supportive are indirectly involved (Woodhead, 2001)8. Michael Porter in his value chain model describes activities in five categories, “inbound logistics, operations, outbound logistics, marketing and sales and services” (Porter, 1985)9. Non value adding activities Non value adding activities in battery manufacture include storage. Battery and its components are harmful and hence require good storage for it not to affect immediate neighbours to a company. Storage does not improve the product form and hence is an unnecessary cost to the company. In order to tackle this, a company should only manufacture in response to demand. Un-programmed management of manufacturing equipment time should also be avoided. The other non value adding activity in battery manufacturing is lack of automation which results to inaccuracies and inefficiencies resulting to product delays. It is advisable to automate and humans are prone to making mistakes. Technology is also cheaper in the long run (Thiry, 1997)10. The company must invest in modern technologies and keep on upgrading as the processes and technologies change with time. This can be done by identifying a task force to research and on technologies that can be used to improve performance of the company and produce high quality tiles. For example they the company can adopt high automated process of battery manufacture to produce high quality battery much faster (Kelly & Male, 1994)11. Procurement involves purchase of machines, materials and supplies and if done efficiently, helps the company to achieve its goals and add value. This can be achieved by ensuring that the orders are made on time and contracts given to trustworthy and reliable individuals who will be able to deliver the inputs of required quality at the right time. This will enable production to be carried out efficiently and achieve the targets and objectives of the plant thus achieving high performance (Dell’Isola, 1997)12. Human resource is a vital part of the company because this is where the skills and the workforce of an organization are. To improve productivity, the employees must work under a favourable environment. The human resource department should ensure that employees are trained and well equipped in their areas of expertise. In addition, they should be given good treatment and care so as to improve their morale in work and thus productivity; these range from benefits, compensations, time off and retreats. The effectiveness of an employee leads to efficient production processes and this result in improved performance of the company enabling it to achieve competitive advantage (Younker, 2003)13. Bibliography Cooper, D., Grey, S., Raymond, G. and Walker, P. (2005): Project Risk management Guidelines: Managing Risks in Large and Complex Procurements. Dallas, M.F. (2006). Value & Risk Management, Blackwell Publishing. Dell’Isola, A (1997) Value Engineering: Practical Applications for Design, Construction, Maintenance and Operations, RS Means Company Loosemore, M, Raftery, J. Reilly, C. & Higgon, D. (2006). Risk Management in Projects. Pickford, J. (2001). Mastering Risk. Prentice Hall. Porter, M. E., (1985). Competitive Advantage. New York.: The Free Press. SAVE (2007). SAVE International Value Standard, SAVE international Thiry, M. (1997). Value Management Practice. Project Management Institute. Vose, D. (2002). Risk Analysis. A Quantitative Guide. Wiley. Younker, D.L. (2003) Value Engineering: Analysis and Methodology, Marcel Dekker Kelly, J. & Male , S.(1994) Value Management in Design and construction: The Economic Management of Projects, Taylor & Francis Woodhead, R.M. & Dow, C. G. (2001). Value Management: Improving Capabilities. Thomas Telford Read More