The case study for this assessment will provide a detailed account of a company, aims/objectives of the case study, theoretical concepts to be used to analyse the case organisation, evaluation of the organisation using the concepts identified, lessons learnt and recommendations. This case study is an analytical piece that requires research and application of operations management theories and concepts. You are advised to use the following template to complete this assessment. A guide to the % of the total word count for each section is given in the brackets.
Provide a brief introduction to the company. Do not simply ‘cut and paste’ information from the company’s web pages or other corporate documents. There is no need to chart the historical account of the company. Provide an overview of the critical incidents, structure, and growth that are relevant to the areas of operations management you will be investigating. Use variety of course material to demonstrate an unbiased perspective.
OUTLINE OF THE PURPOSE OF THE CASE STUDY (5%)
In this section provide a clear idea of why this case study is being written, e.g. what is the focus and what will it be used for? The case study needs to address a problem, area of concern, help improve understanding of a concept etc. You may use current literature on operations management to support your rationale for the case study.
THEORETICAL FRAMEWORKS (25%)
In this section outline the operations management concepts you will use to analyse your case organisation. You may include:
• Inventory management and capacity management.
• Principles of supply chain management.
• Different models of quality
• Risk Management
• Waste and Lean management
You do not need to use all of these concepts, between 4 and 6 would be sufficient. Provide an overview of all of the concepts you will be using. Use operations management literature to provide a ‘synthesised’ summary.
1. Introduction 3
2. Purpose of Case Study 3
3. Capacity Management and Capacity Planning 4
4. Lean Operations and Waste Management 8
5. Quality Management and its affects 10
6. Supply Chain Management 13
7. Analysis of Project Management 16
8. Analysis of Information Systems 18
9. Role of Operations Manager 19
10. Conclusion 21
11. Reference list 22
This case study is about an Indian Sweets house and Restaurant Named Standard Sweets located at Haldwani city, India. Haldwani is a foot-hill area and surrounded by numbers of small cities and is a business hub for the state Uttarakhand. This is the first stop for tourists. The restaurant is three stories well furnished, well equipped building with heart winning interiors. Ground floor is for sweets and payment counter with display items and rest of two floors are for restaurant, both of the floors have separate kitchen and staff. Outer look is fully visible to people pass-by. As there is total glass work with nice decoration. Kitchen is fully equipped. Restaurant is famous for quality food and pure ghee food products. One more thing makes it different from other and that is- its pure vegetarian restaurant. Specialization of the restaurant is in hundreds of types of delicious sweets, spicy food, Chinese food, south Indian food, Indian breakfast and Indian meals. Apart from these they do ice creams, soft drinks and beverages. This restaurant has total 21 permanent uniformed employees and 9 temporary staff, from which there are 4 chief quality chefs, 2 managersand 10 qualified serving staffs. There are 5 permanent workers for sweet shop including 1 manager. 9 temporary workers are for special occasions. They are dedicated to serve quality food and to give quality service to all the customers. The business opens 7 days a week from 7 am to 11 pm in summers and 9 am to 9 pm in winters. This business was started by two brothers in 1991 as a small single story shop and continuously growing because of the best service they provide.
2. PURPOSE OF CASE STUDY
The purpose of this case study is to increase the yearly turnover of the business by managing and controlling the processes where there are some lacks causing the slow growth of business. Sometimes in rush hours, seating arrangements, staff management and production are not up to the mark. And go-down for raw food does not communicate well due to heavy rush, which makes mistakes. To cope up with these problems, business needs to know the lack areas and a proper solution for that which turns towards the case study where the points must be inventory management, capacity management, quality management, waste and lean management and Supply chain management. There is a strong requirement for managing finance and making database for all financial affairs to manage the fund accurately. It’s important to manage the inventory as well to complete the customer’s requirements. Cost control and staff management are the other issues to be sorted. For cost control the first thing is waste management and it plays big role in saving expenses whether that is food, electricity, gas, utensils or staff management. To make all areas perfect and to make business growing faster there is a point quality management which takes care of all areas to perform business better.
3. CAPACITY MANAGEMENT AND CAPACITY PLANNING
According to Vonderembse and White (2004), Capacity is a way to measure the capability of an organization to complete the customer’s demand in a limited frame of time in the form of good available. It can also be defined asthe maximum rate of production of an organization. Wild (2002) defines, capacity management as a critical strategic decision or organisational decisions area of operations. Decisions are helpful to match the capacity with the customer’s demand, which can influence other operational areas as well. Russell and Taylor (2009) describe that Capacity is actually the maximum capability of particular system. Excess of the capacity can be the reason of wastage of the resources of company and can avoid investments in more profitable ventures. Therefore these are very critical decisions that when to increase the capacity and how much capacity to be increased. There are few strategies to lead the capacity which are Capacity lead strategy, Average capacity strategy and Capacity lag strategy.
Capacity Lead Strategy Capacity Leg Strategy
Units Capacity Demand
Average Capacity Strategy
Capacity Lead Strategy – in this strategy capacity expands in expectation of growing demand. This is aviolent strategy and use to lure customers from the other competitors who are forced in capability or going to make a hold in the quicklygrowing market. This scheme allows businesses to react to unanticipated surge and to reward high level of service during height hours, (Russell and Taylor, 2009).
In Average Capacity Strategy, capacity is expanded in order to correspond with average requirement expected. This is a moderate strategy, in this strategy managers are sure that they will surely be selling at least some part of extended production, and will be able to face the period of lesser production than demand.
Capacity Lag Strategy- in this strategy, a company only increases the capacity, where there is a documented proof of increased demand from customer area. As a result, this strategy returns a high profit to the company but sometimes the company can lose customers. Usually thesekinds of strategies are used in industries which have very less competitors and they assume that the lost customers will come back again after capacity increment, (Russell and Taylor, 2009).
The capacity of an organisation is a way of evaluating the employees and other resources which are being used in that organisation. There are two objectives of operation management, first is customer service and the second is proper utilisation of resources available and using wrong resources will make direct impact on these two objectives of operations management. The management of capacity is the first responsibility in the planning done by operation’s managers. According to wild,capacity management is strongly associated with capacity matching of the operating system and the requirement of a customer. In the process of capacity management, we have to consider the operations planning and about the control as well. An operation planning is the process which must be done before starting the operations activities. Operations control is the activity, which is being done during the operation and which includes operations planning decisions, (Wild, 2003).Managing the capacity includes estimating the capacity of business as well. According to Vonderembse and white, there is a simple formula to measure the capacity of a business that is-
Capacity per(period)=(maximum production rate / hour) X (number of hours worked in that period)Where production rate depends on the number of units produced and hours consumed.Production rate=number of units produced/ amount of time. Capacity can be easily changed or increased by making changes in number of hours worked in a limited time frame or by making changes in production rate. The number of hours in a particular time frame can be affected by several reasons like overtime, multiple shifts, unplanned equipment failure and downtime etc., ( Vonderembse and White, 2004).
Application of theory
Capacity planning is an essential part of the management for any business whether that is a small business or a big company. It’s a process like new businesses do, in the new restaurants, it must be a planning for seating capacity, other furniture, kitchen required equipments and space available for customers in order to serve customers better. It should be sufficient staff hired and should be right person for right job to make response better. It must be sufficient space for raw food as well for preparation of the food in busy times. There are some quiet hours and some rush hours to be managed in context of staff. Usually rush hours are weekends and evenings. In the occasional times sweets area is very busy, and restaurant area becomes busy as well because of new and tourist customers. In that rush time, food capacity becomes lesser than the expectations and sometimes due to rainy weather or in winter times, food wastes in routine which must be managed for cost saving and growing profit. Staff management in less busy days is as necessary as in rush time. Cutting 1 employee cost for 1 day increases the profit which can be done by applying capacity management. Along with this, financial matters are one of the reasonswho directly effect to capacity. There should not be any lacks due to finance in capacity of the restaurant to make a strong image in the market. Finance includes the decoration cost as well which is applied in occasions and it is very common to spend some money on decoration to attract customers.
To take care of the raw and food preparation area in rush time; it must be extra labour to prepare sweets and raw food faster and to avoid errors and mistakes and to manage the capacity of food. Furniture must be well places because it must not be hassle of getting in more furniture or making customers in trouble. There should be extra seating arrangement for customers in busy times to avoid hassle. This will help management to serve customers and to offer them a good experience. In context of food or menu items, management should learn from prior experience that what product is most selling product or most lovable in rush time or occasions and which product is very less liked by customers. Raw food preparation can help in this situation to prepare food accordingly to avoid customer service time and to avoid manpower. Along with this it’s very obvious that visiting customers get convert to take away customers to save their time. But in busy hours, it usually takes similar time for serving food on table or for take-away. Suggestion for this situation is to prepare some preferred food in advance to avoid this sort of critical situation to save time and to perform better.
4. LEAN OPERATIONS AND WASTE MANAGEMENT
According to slack, chambers & Johnston (2004) lean operations and just-in-time planning are used to apply to get instant outputs with good quality and no waste main rule of lean management is comparativelydirectly forward to understand, that means touching to the removal of all the waste to manufacture a faster, reliable and high quality products and services. And this all should be done in low cost. This term is very similar to the process called just-in-time. In this process company produce the products only when they are required, not in advance, not more not even less. Therefore lean management and just-in-time are similar processes and are being used by several companies especially when there is an urgent demand. And usually used by small companies due to financial matters.(Slack et al., 2004); Gerhard (2007) states lean as it is westernization of the concept used in Japan which has several names as JIT, TQM (Total Quality Management), Pull manufacturing and others. According to Russell (2009), most of the people who take lean production as a structure for reducing stock, actually don’t evenbelieve the system to be appropriate to services. Though, this is understoodthat lean production has more than low production levels. This reduces or removes waste, streamlines operations, offers fast turnovers and close trader relations, and off course adjusts rapidly to changes in demand.
Application of theory
In the case of food business like restaurants this is the first priority to reduce waste. Lean and waste management are very crucial for restaurants because there is a high probability of waste in such places like electricity, gas, foodand other stuff. There are some common wastes:
Over-production: this is the most common waste occurs in restaurants that food is approx 25% extra than required while preparing because producing is more than required. This is the worst waste in the industry which makes direct impact to management.
Preparation waste: in rush times, approx 15-20% of food is wasted due to fast processes like peeling off vegetables, cutting vegetables etc.
Defects waste: usually 3-5% of food goes in waste due to wrong recipe used or ignoring customers’ special instructions.
Waiting: if production time is wasted by any reason then it will increase the production cost and this directly effects to the profitability of business.
Incorrect use of staff and their abilities: in the restaurants, this is a big waste that can play a big role in business performance so should be avoided. Sometimes when there is no rush, more than required staff is at work. And sometimes we do not give the task according to capability of the employee and that’s again a waste.
Gas and electricity: electricity and gas over consumption is approx 30% more than required because of all the electric equipments like AC and gas cooker are switched on whether there is no customer.
Food businesses definitely have waste ratio from 10-30%, especially restaurants. Their usual wastes are food, manpower, electricity and common utility items. And the preventions are, all the equipments and machines who consume heavy electricity must be switched on only when needed. When there is downtime, quiet or no- rush, manpower must be reduced. Food waste must be reduced by reviewing the purchase, and reviewing the quantity required. Reduce waste of general stuff like napkins, disposable items. There must be an incentive plan for staff to avoid waste. Skills of staff must be used properly.
5. QUALITY MANAGEMANT AND ITS AFFECTS
According to Hoyle (1994), techniques used to improve and maintain the quality of a product like quality control, quality enhancement, and quality guarantee known as Quality management. According to Knowles (2011) before getting deep in quality management, the meaning of word ‘quality’ should be clear. Quality means a degree of excellence as the Concise Oxford Dictionary says. The totality of features to show the ability and to achieve a requirement is quality. If quality is the ending point for a route, then quality management is the only way, the only procedure to reach there. In other definition quality is getting what you paid for. There are five approaches of quality which define what is quality in their terms. The transcend approach- synonymous with natural fineness. Here quality is defined in the term of products as a Quality car is Rolls Royce, A Quality watch is Rolex. Manufacturing Based Approach- is making products which are free of errors and less expensive. User Based Approach- this approach is to making it sure that the product purchased by the customer is best suitable and fit for its function. In Product based approach the concentration is on quality as an accurate and computable set of features which is the main requirement to satisfy the customer. Finally there is Value Based approach which checks the quality in the terms of price and cost. (Slack, Chambers and Johnston, 2004)
Dimensions of quality for manufactured products:
Performance: the basic effective features of a product. For example; how good a car is in driving and handling or mileage.
Features: extra items added in basic features to increase features list.
Reliability: the prospects that a product will work fine within a given time frame.
Durability: how long the product works without errors or life of a product.
Aesthetics: does the product look good enough, how the product feels, sounds, smells or tastes.
Safety: that the customer will be safe and will feel safe without suffering.
The main components of quality management plan are Quality objectives, process review, quality standards, quality control, quality responsibilities and quality assurance plan. (Plan the project, 2006)
Application of theory
Restaurants are the businesses of serving food to customers. In the other words, they are providing products and services. For a restaurant, the quality of the food must achieve or exceed the expectations of customers as a good restaurant promises to its customers. In the case of restaurants, quality stands for quality of food, quality of service and quality of maintenance. Quality food is the first thing to be noticed in a food business by management and by the customer. Food must be good in taste, fresh, clean and should be prepared in clean environment with good quality of spices, raw material or stuff. The customer expects the right taste and the right flavour of the food ordered and probably in the expected shape and well served. Note that only good taste may not be a good quality, quality includes healthy food, cleanly prepared, nicely served and very good and accurate in taste.
Usually there are some pictures of delicious food in restaurants for advertisement, when a customer orders, he or she expects the same look with expected taste. If an order placed for a south Indian dosa, but when the order placed, it’s not looking good like in the advertisement picture, and may be half cooked or spices are not accurate, then it is not a quality meal or food because customer is not getting what he ordered or what is advertised. Quality food and service are delicious food well served with respect. Restaurant and all utensils should be in hygienic condition. Staff should be well dressed and clean and hygiene looks.
Food and service quality must be consistently good so that all of the customers can get the same quality taste and services. Customers expect even better service next time, and this is the point which demands consistency and regularity in quality. Food must be cooked with fresh vegetables and grains. Apart from this, different people expect different treatment. Some of them expect friendly treatment and some of them expect respect, honour without disturbance. This is the task for staff to observe at least the regular customers and treat them as expected but without harming the values of the restaurant. It will help for a better business. And for a food business, word of mouth is the best advertisement.
6. SUPPLY CHAIN MANAGEMENT
According to Slack (2004), a supply chain is a system of an organization who is responsible for transferring a product or a service from supplier to the customer. Similarly, Supply chain Management(SCM) is a system or a management of a network of interrelated businesses who are responsible for transferring goods, products or services to customers. The credit of the conception of SCM goes to Keith Oliver, who described this conception in 1982 as “Supply chain management (SCM) is the process of planning, implementing, and controlling the operations of the supply chain with the purpose to satisfy customer requirements as efficiently as possible. Supply chain management spans all movement and storage of raw materials, work-in-process inventory, and finished goods from point-of-origin to point-of-consumption”. (supplychainrecruit.com, 2011). This was the first definition for supply chain management. The purpose of this management is to improve performance, cost and flexibility and last but not the least for the profit of end customer.
The concept is defined in five simple and easy terms which are: plan, source, make, deliver, return. There is a huge growth noted in the area of Supply Chain Management since past 20 years as gradually all the businesses have started taking advantage of the facility of distance business, global business with the help of easy and cost-efficient transportation of goods and services. Gradually businesses started getting responsive to SCM tools like Just-In-Time and Kan Ban and SCM became globally accepted business and people loved it, (supplychainrecruit.com, 2011). Western businesses were growing faster and inheriting the fast growing and changing environment of business. At the same piece of time some of the famous and committed IT companies were struggling to develop a new complex IT system to help businesses in supply chain and some of the complex activities because the term Supply Chain Management exists for businesses and to support them only. Some of the sum areas of SCM are: – Forecasting or planning, Purchase, Operations, Inventory management, Transportation, Distribution and Customer service, (Mangan and Butcher, 2008)
Now Supply Chain Management is an essential part of business though there is not proper standard model for STM. Some of the large scale businesses have SCM as a part of their business management team and some of the businesses just follow few of the steps of SCM like purchasing and logistics and then they contact a Supply Chain Management system to do the other things, (Amy, 2010).
Application of theory
A Restaurant has some complex processes which are the part of business and to be managed very carefully. One of them is Management of Supply Chain. It’s not an easy task to count each and every product carefully if it’s a raw product or thousands of small items. The second problem is to check the stock and order the short items and items which have low quantity. This process most of the times goes wrong due to a large number of products and selling of a particular product is depended upon the demand of customers. There is not a proper skilled person to count the stock and maintain it properly in restaurants. Even stores are not in proper position so that all the products could be countable. This is a crucial step to make a business successful which has to be taken care by management. Supply chain Management helps businesses to avoid the incidents of over-stock and out-of-stock which is actually not a positive point for a growing business. There is not proper and on time supply due to not choosing the proper transport for the particular product service.
First recommendation for a sweets shop and restaurant is to get a sufficient store and products should be visible and easy countable. This can be done with the help of a skilled person who will use the previous experience to manage the proper stock. This will help restaurant to avoid the incidents of over-stock and out-of-stock products. SCM is the one who is responsible for in store product cost, which can be reduced by a smart management. Therefore Management has to find the cheapest and the best service for products incoming and parcels outgoing. There should be a transparent communication between in store management and stock management to help managing the quantity of particular products and to manage in-store cost of all products. Must use IT services to know and calculate the product cost and stock management.
7. ANALYSIS OF PROJECT MANAGEMENT
The word project can be described as an activity towards a specific target with a limited time-frame. Project is a fixed action with a detailed target and a time frame with the help of some resources, (Wild, 2002).Project management therefore is related with the search of a definite purpose, using given resources on a pre-described time period. Usually it demands a proper arrangement and establishment of an operating system. An Institute of Project management (PMI) describes project management as “meeting project requirement through the application of knowledge, skills, tools and techniques to project activities. This is accomplished through the use of initiating, planning, executing, controlling and closing a project.” (Stricker, 2013)
Even though this description may look difficult, the principals of project management are entrenched in common sense and expediency. Is there any parameter to decide that this particular one is a project? How can someone decide? And the easy way to decide this is to separate it in two parts, functional management and project management. Functional management is a continuous management of a business. For example if there is an IT company having a client which takes back up support from IT company, this It company is dedicated to take regular back up of all the data and to provide final report at last, in this example IT company is continuously working with the client, with is known as functional management.
Now if the same client company calls one day to IT company and explains that they want to upgrade their system and they have some new inputs and requirement to put in the system. And they are giving IT company one year time to complete the new requirements that is called project and the management of that project with limited time frame will be called project management. After understanding what the project management is, the next step is to sketch the scope, time and budget required or offered. These three things work as a pyramid of project management which has to be completed before the project starts. Project management is all about organizing, planning and controlling these three things time, budget and scope. If we take three lines of a pyramid as scope, budget and time, then while drawing the new line in the mid will show the quality of the product. Because if these main parts of project management will shrink or will go up or down, the quality of product will get affected, (Stricker, 2013)
Budget Quality Scope
Application of project management concept to the sweets shop and restaurant:
Project management plays an important role in food business because food business is very much dependent on time, cost and scope. Here cost show the budget of the product, scope shows the probability of being liked by the customer to a particular product. The project management tools will help the restaurant at the time of occasions when there is a huge rush and a lot of orders will limited period of time have to be done. There are lot of mistakes done in this crucial time frame because of wrong management. Preparation staffs are not asked to prepare food in a certain time. There is no instruction for cost management according to order but it should be there because some special order for delivery out postage are totally dependent on cost and time. And if these two things are forcefully done then the quality of the product will automatically get affected that means a direct impact on the sale of business. Before introducing a new menu product, a survey or a complimentary product test is required. Even if an existing product is being prepared daily without knowing the demand or scope then it will turn to waste.
If the preparation team and the management will go with project management pyramid, all the problems will get solved. Preparation staff should get the time and cost instructions to get the finest result which is known as quality. For the daily use these should be a use of full project management for each product which will save the wastage.
8. ANALYSIS OF INFORMATION SYSTEM
Manager of a business need information system to take their decisions because this system provides the information they need. Near the beginningindustry computers were used for general operations like tracking record, invoicing, sales, or payroll information, with small detail or arrangement. that time, these computer applications were very hard to handle, complex, hardware storage capacities grew, and technologies enhanced for linking previously isolated applications. When managers got facility to store and access more data, it was easy to manage and perform the tasks to achieve the goals of the businesses. MIS system helped managers in inventory, maintaining records, sales and purchase etc. Over time, the phrasebroaden to comprise: decision support systems(DSS), human resource management(HRM), enterprise resource planning (ERP), enterprise performance management (EPM), supply chain management (SCM), customer relationship management (CRM), project management and database retrieval applications, (Oye, Iahad and Shakil, 2011). MIS supports a business for long time and helps to perform better. It helps a business to face the critical conditions and makes business aware about the problem occurs.
Application of Theory
This case study shows that the implementation of Information System and management of that important information is the necessary step to maintain proper quality and standard where there is a food business and specially when there is direct communication with customer. An Information system helps keeping records safe and secure, makes system faster and easy, calculates and solves financial and managerial problems and manages the stock which is very important for the business like sweet shop and Restaurant. IT is the best and accurate system in the terms of finance like daily sales, monthly report, tax counting etc. It is not easy for the manager to do all the tasks including these all day activity sheets without errors.
Information systems and information system management are the first need of the sweet house and restaurants. This is the easiest way to calculate monthly income, monthly expenses, monthly sale, and monthly growth. Apart from these an information system can help businesses in many other ways. There should be an online Recording camera at every place where needed.
9. ROLE OF OPERATIONS MANAGER
According to slack (2007) an operations manager has some well known responsibilities towards his job and the business which work to produce the quality output and better services. Seeing the structure of the organization, the accuratepersonality of responsibilities which are described under the operations role may be different from business to business. Though the activities mentioned below are generally applicable in all kind of businesses and operations:
Understanding and setting Strategic Goals: Operations managers of the businesses must undoubtedly understand and follow the targets of the business and build up anapparentimage of accurately how operations will assistaccomplish them. This also includes transforming these targets into responsibilities for the operation’s quality, speed, reliability, elasticity,performance, objectives, and cost.
Operations plan development: there are number of decisions and objectives involved in Operations Management, this is a bit hard for operations manager to make and set a rulebook of guidelines which will be helpful for the long term objectives of the business.
Designing and deciding the products, services and processes of operations: Design includes making sure the material form, shape and composition or material which has to be included inproducts, services and procedures.
Planning and controlling: in the term planning and controlling, Operations managers have to decide the role of operations resources, controlling the whole process and completing the process successfully.
Getting better performance of operation: Operations managers are responsible to constantlyobserve and advance the overall performance and result of their operation, (Slack, Johnston & Chambers, 2007).
The concepts and ideas got from Operations Management, and utilising the operations management tools in this sweets shop and Restaurants business helped the business in the terms of waste management, quality control, stock maintenance, increasing the capacity, reducing the expanses and finally growing the business faster. Food waste, electricity and gas waste issues were solved by the utilization of waste management. The Quality of products was improved by quality management. Capacity of the business has been increased by using capacity management. Production management helped the system to manage the budget, time and scope to produce the best quality product. This case study has proved that Operation Management is the soul of the business.
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