Tetra Pak - Main Inputs, Outputs, and the Transformation Process Involved, Planning and Controlling - Case Study Example

Planning and Control Table of Contents Introduction 2 A brief description of Tetra Pak International 2 Tetra park Organizational chart 4 The main inputs, outputs and the transformation process involved 4 A reconfigured value chain of Tetra Park 4 A detailed critique of Planning and Control in Tetra Pak International 6 Planning 6 Controlling 8 Recommendations 10 Conclusion 12 Bibliography 13 Introduction Today, production of both food and beverages proves to be a more complex enterprise which calls for detailed planning since the reception of the required raw materials to the activities of processing, packaging as well as distribution of finished products. As a result, it is important to have a constant monitoring of the value chain so as to ensure that the food supplied to consumers is rigorously protected through consistent provision of quality products of high throughput and reduced operating costs. Tetra Pak holds a unique position within the food processing industry because of its successful and profitable resources giving it the capability to invest its future operations. The company’s decision-making processes are based on employee behavior as well as customer service, majorly focusing on customer satisfaction. On the other hand, controlling involves monitoring, comparing and improving work performance. It is important to point out that effective controls are crucial in completing activities through a manner in which organization can attain its intended goals. Controls are important because they enable managers to determine whether their organizational goals are met or not. Therefore, the value of a control function is implemented through planning, employee empowering and protection of workplaces (Benton & Shin 2000). A brief description of Tetra Pak International Tetra Pak is an international company founded in 1951 in Sweden by Reuben Rausing. It is the largest food processing as well as packaging company. The company is a branch of the Tetra Laval group, and thus commonly known of processing and packaging, supply services for milk, soups, juices among other liquids. Tetra Pak works closely with both its customers and suppliers so as to provide products which are of good quality, safe and innovative. The company supplies various carton-packaging that meets the needs of its different customers. Additionally, Tetra Pak involves in the production of its state-of-the-art food processing services and design. This enables the company to achieve a sustained competitive advantage over other food processing companies like Bidco and Unilver, hence, positioning itself well to meet the needs of various people across the globe. It is apparent that heritage, innovation as well as understanding of the consumer needs are the key drivers for Tetra Pak. The management strongly believes in encouraging its customers to develop a more profitable growth and sustainable environment. Therefore, it is important to note that Tetra Pak is a responsible food processing industry leader capable of promoting the best corporate citizenship. Through its product-service packaging system, Tetra Pak offers highly attractive and finished carton packaged as well as consumable fresh products. The packaging is enhanced through consumer convenience, complete brand exposure, optimal shelf life and easy to open and thus, protecting the company’s flavors, brands and the environment. The processing equipments enable Tetra Pak to provide an absolute solution to products such as dairy, beverages, ice cream and cheese. The services and food solutions the company provides is efficient because it reduces downtime, costs and promotes overall performance. This is achieved through the four main product portfolio services namely; pre-production, production, improvement and training services. It is clear that Tetra Pak supportive throughout its products lifecycle and customer operations management ensuring that its service products are sold as stand-alone solutions. Tetra park Organizational chart The main inputs, outputs and the transformation process involved Tetra-Pak is well-known of its reconfigured value chain within the packaging industry. This is reflected in its processing service for products such as dairy products and orange juice. The company has a well-designed filling machine, specifically developed for aseptic packages. However, the company undertakes continuous changes in the packaging industry as illustrated in its value chain below. A reconfigured value chain of Tetra Park Life container No refrigerated Low store Longer shelf on site trucks handling required No wasted space No need to No need to Specialized in the filling & refrigerate & refrigerate & less equipment packing less space is required specialization space The integration of Tetra Pak and Alfa-Laval Liquid Food is a clear indication that the company is well equipped with the required expertise to plan and process its liquid foodstuffs. It is also provides the view that Tetra Pak’s resources are ideal in developing, installing and servicing of its equipments as well as product lines, processing and marketing. The production process involves pumping, processing, heating and cooling of products within an uninterruptable and closed system. However, there is automatic cleaning of the processing system at the end of each production process. This enhances a sustained production of processed liquid foodstuffs, and thus providing products of higher quality, in good yields and reduced operating costs (Burt 1998). Through the Operational Cost Reduction Programme (OCRP) of Tetra Pak, the company is able to improve its dairy productivity as well as cut the operating costs. It is a food processing programme that enables the company’s customers to analyze and minimize their costs to enhance productivity by focusing on improved operational efficiency. The OCR programme helps Tetra Pak to restructure its processes in order to transform itself or become a consumer-focused as well as results-oriented company. The initiative was developed and operates on the basis of industry standards under the principle of World Class Manufacturing (WCM). Together with other tools and methodologies, the company has adopted various applications to dairy products, juices as well plants for still drinks which controls the processing and filling lines of Tetra Pak. Basically, the company uses a methodology known as Focused Improvement which takes into consideration activities that promote quality performance of a given part of the processing plant. This is aimed at minimizing the operational costs, enhance production capacity as well as lead to improved line performance (Lahr & Dietzenbacher 2001). A detailed critique of Planning and Control in Tetra Pak International Planning and control are two important managerial functions in operations management and decision-making processes of an organization. Planning involves assessing the available and future human as well as physical resources of a given organization to achieve effective coordination, development and make perfect changes. The management is able to formulate detailed plans that can result in optimum balance of customer needs aided with the existing resources in an organization (Chmielewski & Frank 2003). Planning Since the vision of Tetra Pak is focused on making the food it process safe and available, the management plans well for its value chain operation strategy strongly and clearly focusing on customer satisfaction. The management prioritizes its objectives to rightfully meet the needs of its customers as well as support the organization’s missions of achieving a sustainable and profitable growth. This implies that Tetra Pak keenly monitors the behaviors of its customers, and thus customer service and satisfaction is the company’s main focus. The main strategic planning in Tetra Pak organization is achieved through a Global Hub Team. Different types of control crucial to the operations management and decision-making in the organizations. The operational performance as well as planning efforts made at Tetra Pak focus on having fewer man-hours, less consumption of utilities and bottlenecks, reduced maintenance costs, less material wastage, downtime and off-spec product (Kee 2003). Strategic plans are largely used in Tetra Pak to achieve its overall goals and objectives. Operational plans which give specific details of how the overall goals should be achieved are also applied accomplish activities in Tetra Pak. On the other hand, directional plans are flexible, making it ideal for developing the general guidelines. Due to the innovative and dynamic environmental nature of Tetra Pak, the company’s plans often change in regard to the market trends as well as environmental factors. Thus, the plans used in Tetra Pak can be divided into two major categories, single-sue plans which meet specific needs a given situation and standing plans which provide continuous guidance for the processing and marketing activities. Planning is crucial to smoothening production runs. Although there is provision of diversified and customized production lines, from the market point of view, it can be noted that a trend exists within the process industries, for instance, Tetra Pak shifting from the make-to-stock towards the make-to-order strategies. From the Tetra Pak’s operations management, it can be argued that planning objectives set for the processes of pre-bottleneck production are required to feed only the bottleneck associated with less or no interrupted lines of products as a way to keep the production stage engaged (Pendharkar 1997). Controlling The controlling and planning processes in Tetra Pak are concurrently implemented. This clearly indicates that control works important linkages back to the function of planning. Therefore, Tetra Pak fosters a culture of using appropriate controls to avoid deviations from long-term as well as short-term planned goals. Tetra Pak focuses its control on empowering its employees with a strong belief that empowered employees become motivated resources. The management of Tetra Pak provides their subordinates with the freedom of being creative which in turn provides periodic reports or updated information about organizational performance. Tetra Pak also promotes security for its employees in their workplaces, an indication that safety and protection of employees whether at work or travelling is regarded as the company’s foremost priority. For instance, various training programs are provided as guides to employees on procedures such as fire drills and how to make use of fire extinguishers. However, in cases of terrorist threats or strikes and the related problems, employees are well-informed about the various hotels to stay in for safety. Through the implementation of control processes such as World Class Management (WCM) process, Tetra Pak to achieve cost efficiency since the principle targets zero wastage. It is a concept among other continuous improvement processes implemented at factory and market levels. This implies that there is efficient processing of resources in Tetra Pak organization. The organization monitors its activities to determine whether or not is completed as planned, and thus creating opportunities to make improvements of significant deviations. Therefore, the company is very considerate about its products by ensuring that customer requirements are met (Brown-Hume 1995). The management achieves this by comparing the overall performance evaluations with the previously set standards during the planning phase. Such interventions are made in order to determine the company’s standing point in the eyes of its customer and its competitive capability in food processing and marketing. Feed-Forward and Concurrent controls are the two major control processes used in Tetra Pak where the company applies feed-forward control to overcome threat problems associated with the selling of a product within the market as well as mitigating some anticipated problems. This clearly indicates that Tetra Pak has the capability to cope with any problem earlier enough and avoid future difficulties when its products are already launched within the market. On the other hand, Concurrent control is used to overcome unique problems, for instance, cases of disasters where the management checks the products while disaster activities are in progress. Thus, Tetra Pak undertakes cost-cutting strategies to avoid huge expenses that could be incurred on correcting errors associated with products launching within the market as illustrated below (Burt 1998). Bertrand et.al (2000) identified production control as the task of coordinating the supply and production activities within the manufacturing systems so as to meet the various delivery flexibility and reliability at the lowest cost. Tetra Pak applies production control strategies as the continuous process within the food production industries for effective coordination of the processing activities to increase profits. Therefore, production controls in food processing industries results in minimized costs and maximized profits. However, for production control to be successful, controls such as availability of the required raw materials, co-products and by-products, optimal utilization of expensive equipments as well as simultaneous production of the end products must be considered to ensure that demand satisfaction is no longer enforced (Bertrand et.al 2000). Recommendations Although Tetra Pak is well-known of its planning and controlling function, there is need to improve its operational processes. Since smallest units at Tetra Pak organization are not largely considered in decision-making processes, they do not contribute to the fullest. The management should revise its decision-making strategies to include smallest units to avoid de-motivational of the employees at such levels. Tetra Pak is dominated with rigid controls particularly in the manufacturing department with limited quantified control processes identified in support functions. It is important to argue that such a disparity can lead to imbalances of management processes, creating inaccuracies in evaluation processes and results. Therefore, the operation management at Tetra Pak should make use of a coherent process of planning and controlling in its food processing and marketing services (Kim, Davis & Cox 2003). Since Tetra Pak is perceived to be a market leader, it strategically positions itself in the market to provide quality packaging material to process and package food. However, such services are associated with extremely higher prices. This makes a large number of customers to have a negative view of the organization in terms of its product prices. Thus, creating room for small competitors flood the market and take advantage of the benefits. It is important for Tetra Pak to lower prices for its products and services so as to increase the company’s customer satisfaction level. The management of Tetra Pak should make a selection of the ideal sales portfolio so as to maximize profits at minimized costs. Therefore, its production control can be enhanced by ensuring that controls such as availability of the required raw materials, co-products and by-products, optimal utilization of expensive equipments and simultaneous production of the end products are well planned for so that demand satisfaction is no longer enforced. Under the shifting from the make-to-stock towards the make-to-order strategies market condition, Tetra Pak can adopt the hybrid push-pull types of control systems so as to have minimal levels of in-process inventory, and thus being a position to saturate its bottleneck equipments (Donk 2001). Conclusion Tetra Pak holds a unique position in food processing industry due to its successful and profitable resources management which gives it the capability to invest its future operations. The company bases its decision-making processes on employee behavior as well as customer service, majorly focusing on customer satisfaction. Since controls are important in enabling managers to determine whether their organizational goals are met or not, their functions are implemented through planning, employee empowering and protection of workplaces. Tetra Pak works closely with both its customers and suppliers so as to provide products which are of good quality, safe and innovative. Tetra-Pak is well-known of its reconfigured value chain within the packaging industry. The company is a market leader because it strategically positions itself within the market to provide quality packaging material to process and package food. Feed-Forward and Concurrent controls are the two major control processes used in Tetra Pak. Production controls in food processing industries help in minimizing costs and maximizing profits. However, its successful implementation must be enhanced by controls such as availability of the required raw materials, co-products and by-products, optimal utilization of expensive equipments as well as simultaneous production of the end products. Bibliography Benton, W. C. & Shin, H. (2000) ‘Manufacturing planning and control: the evolution of MRP and JIT integration.’ European Journal of Operational Research, Vol.110, pp.411–440. Brown-Humes, C. (1995) ‘Deal leads to change of control at Tetra Laval.’ Financial Times August 23, p.18. Burt, T. (1998) ‘Tetra Pak shapes up for plastic push. Financial Times, December 16, p.28. Chmielewski, R.A.N & Frank, J.F. (2003) ‘Biofilm Formation and Control in Food Processing Facilities.’ Comprehensive Reviews in Food Science and Food Safety, Vol. 2, pp.22-32. Donk, D. P. V. (2001) ‘Make to stock or make to order: the decoupling point in the food processing industries.’ International Journal of Production Economics, Vol.69, pp.297–306. Kee, C. R. 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