Operation Management at Baskin Robbins - Case Study Example

Operation Management at Baskin Robbins

Introduction

Baskin Robbins is a franchise based business functioning in thirty-five nations for the last six decades. It was founded by Irv Robbins and Burt Baskin, and established in 1945. It has over one hundred and fifty million consumers globally with approximately 2,800 locations nationwide and nearly 5,800 stores worldwide. It is located in the area of Canton, Massachusetts (Shrestha, 2015). The company is the world’s leading chain of ice cream stores. It is better recognized for its generous range of flavors as it offers over one thousand flavors of ice cream, including fat-free, light choices and sugar-free. Its wide-ranging menu comprises sorbets, beverages, frozen yogurt, sherbets, sundaes and ice cream cakes.

In the 1970s, the expansion of Baskin Robbins chain further went international in as much as operating stores throughout the hemispheres. Its geographical locations include Australia, Singapore, Greece, Canada, Jamaica, Korea, and Mexico amongst others. It has 1000 flavors of ice-cream that consist of no sugar and low fat ice-cream, affordable prices with the product quality, offer numerous services for distinct age groups. Baskin Robbins has experienced an increase in the number of tourists, expatriates and the increasing number of young individuals who demands in fast food, for instance, ice creams. The company targets individuals from U.S and international nations that are between nine and eighty years old. This paper discusses the operation management at the company.

Vision and Mission and Operational Strategies of the Organization

The mission of Baskin Robbins states that the company exists to thrill clients, define and lead multibranding, enrich stakeholders and build influential brands. On the other hand, its organizational vision is to be the best premium ice cream player. Baskin Robbins particularly operates on the core values of respect for integrity, individuals, innovation, connection, performance, discipline, transparency, fairness, quality, humility, and responsibility.

With regard to its operational strategies, the company projected to have a strong brand image, a remarkable product quality, customer loyalty and become innovative in production. The company has adopted a clustering strategy that involves the gathering of franchises, networks, and branches centered on the differentiated products they provide to expand its business operations. It implies means that a business can open diverse branches in the same region that offer distinct products. It makes sure that the business expands, and its branches do not compete among themselves (Shrestha, 2015). The company has installed docking systems that guarantee that the shelves are restocked electronically. There is no its competitor that has that type of technology hence it enjoys a competitive advantage. The technology makes sure that the shelves are replenished twice as fast as that of the competitors; therefore, it saves the clients from the inconveniences triggered by deficits,

The company has invested in the radio frequency identification instead of the CCTV surveillance technology that has been incapable of effectively monitoring and controlling pilferage. It is a productive technique in that is decreases costs of inventory and eases products movement from the suppliers to the supermarket since of its great profile system of tracking (Mahmoud et al., 2015). Furthermore, it reduces the human involvement level in the process of surveillance and inventory implying that it also aids in reducing costs of labor.

The overall Supply Chain Mechanism

The company supply chain is made up of an extensive network of suppliers, some of whom offer products that eventually end up in restaurants whereas others offer products or services that assist in the daily business operations. Baskin Robbins closely works with numerous suppliers that provide the raw materials utilized to make its products. The management of supply chain is achieved through close work with the company suppliers (Arndt, 2004). The specifics of the supply chain of the company determine the main directions of raw materials and flows of information. The materials flow is directed vertically in that on the bottom of the chain raw materials are made, ice creams and other products are manufactured, the finished products move to centers of distribution to retail stores and eventually to the final consumers. The flows of information in the company are multifaceted since they are directed both upwards and downwards the chain and between distinct units on one level of the chain.

The single level flows of information are controlled by the company in some cases, for instance, when communication happens amongst distinct centers of distribution, and in some situations it is out of the scope of control of the company. It might involve the communication between independent suppliers and manufacturers (Arndt, 2004). Although, the information flows amongst independent contractors are beyond the direct control of the company since they are significant for the performance of the company. Additionally, it might fall victim of collusive conduct. There is the assurance of accuracy and timeliness of information as for the flows of information that the company can control. Therefore, the information systems require to be up to date, reliable and easy to utilize.

Work Processes that Create Value

The company operation function is concerned with the process of converting input resources into valuable outputs; as a result, it adds value to some entity. It constitutes the central and key function of the company. The operation functions to smooth the process flow to transform input into needed output in an inexpensive manner (Payan et al., 2015). Baskin Robbins operation function controls the material, labor, machines, information, and capital. It converts them inform of designing of the product, planning process and control of production and gives output inform of goods and services.

The operation management department of the Baskin Robbins Company makes an exertion in minimizing production costs to produce high-quality products and services. The company product design enables appropriate utilization of labor, capital, machines, and raw materials. It buys the raw materials in bulk hence obtain trade discounts that make it reduce the unit. It achieved production control through minimizing the product unit cost (Payan et al., 2015). It has several varieties of products and services that it offers to its local and international customers.

Product and Service Design

The company has designed a new product known as the Berry Nutty Banana. It is composed of mixtures of a nutty combination of berry flavors and banana ice cream (Heizer et al., 2013). The company is the king in ice cream market in that they generated a unique positioning for the business brand through introducing interesting fresh flavors. Besides, it permits its clients to sample as numerous flavors customers' needs before making the ultimate choice that is a good gesture for the industry of ice cream (Payan et al., 2015). The company sales products and services are often linked in that a product typically combines a tangible constituent and an intangible constituent. The product, service, and type of idea is a neighborhood ice cream shop with a passion and the appealing treats, fun and smiles for the whole neighborhood. Additionally, the company type of concept is to offer the clients the chance to select from the default choice or generate the particular designs of choices.

Quality Management Issues

Currently, quality management is one of the most significant and most highlighted concerns in food and beverage industry. The enhancement of quality of the operation can result in cost reduction at the company. Total quality management is presently a vital aspect and resource to strategic planning. It cannot be utilized competitively and efficiently unless it is accurately defined, measured accordingly, logically assessed and frequently monitored (Goetsch & Davis, 2014). The company's total quality management has empowered it to adopt a level of a business strategy known as the cost leadership strategy wherein the standardized quality and products with features that are acceptable to the consumers of the company's product permit it to make immense sales that minimize the cost of operation. Quality maintenance assists the company to elude coats that originate from legal issues and payment of clients owing to issues of quality. The company has installed effective scale facilities, closely controlled of the overhead cost, upheld minimal costs of sales and guaranteed proper monitoring of all business operations to save cost through quality management.

Capacity Planning

The company has the potential of producing different products and offers them to the customers to make the demand remain constant, timely supplies that are of actual quantities and qualities. It can comprehend its clients' needs and meet them that lead to its success in business operations (Heizer et al., 2013). Baskin Robbins has different machines, workforces, and supplies that enable it production and business operations. It has many supplies in the world and its chain of supply consists of farmers, producers, processors, and distributors. Baskin Robbins has customized service systems to guarantee faster resolution when equipment hitches emanates.

Forecasting Techniques

Currently, Baskin Robbins uses qualitative forecasting technique that is best for forecasting the next three years since it focuses on the real time expert’s research and analysis (Pilinkiene, 2015). The company is subject to some substantial risks in using qualitative forecasting methods such as reduced average value transactions and lower customer traffic that in turn adversely influence the company’s net revenues and operating income.

Layout and Facilities Planning

The company’s layout and facilities planning considerably impact its productivity and service quality. It uses product layouts that have grouped the identical functions or processes, and they are less capital and more labor intensive, flexible and have higher material handling costs, and necessitate more space (Mahmoud et al., 2015). The company product layout arranges resources in a line flow and utilizes specialized resources, have higher rates of processing, capital intensive, decreased costs of material handling, relatively inflexible and need less space.

Location Planning

The Baskin Robbins location planning was suitable since a good location has a big effect on the company total incomes and operating expenses. The location of Baskin Robbins is convenient to its clients, and the premise was cost-effective (Tate et al., 2014). The entire location of the company and its branches had enough staff that possesses right knowledge and skills and enthusiastic to discharge their duties at the right wages.

The Revenue Trend of Baskin Robbins between 2011 and 2014

In 2010, the take-home ice cream business embodied the largest percentage of approximately 67.7% of total ice cream sales in the U. S.

Year

2011

2012

2013

2014

Total Revenues (million U.S dollars)

150

143

162

166

In the graph above, the revenue increased in 2013 and 2014 but decreased between 2011 and 2012. There was a total revenue decrease of 4.67% between 2011 and 2012 (Payan et al., 2015). The total revenue from the company U.S and global markets accounted for fourteen percent of the Dunkin’ Brands’ total revenue. Out of the 165 million U.S dollars, 122 million U.S dollars was obtained from Baskin-Robbins’ global market, and 43 million U.S dollars was obtained from its U.S market. In 2014, the company revenues grew only by 2.47%.

Conclusion

In conclusion the success of Baskin Robbins is largely attributed to its robust operations strategies. Nevertheless, the company continues to face a number of operational challenges some of which include competitor, legal constraints and city ordinances. It should set the price by determining the above factors to remain competitive in the market in the future.