lloware lager and profitable accounts, urgentlyrequired 20
, London Zoo and I’ll Phone You BackIntroductionExecutive Holloware Ltd., London Zoo and Oilpartz Ltd. are the threeorganizations, which all enjoy high reputation in UK, forming the subjectof this case study. Each of them has well-established institutions, butrecently the operations management of the three companies has experiencedserious problems. The aim of the course work is to compare and contrastthese problems and try to give some means of solving problems. It consistsof three parts. The first part is mainly to point out the problems existingin their companies.
Then by using the transformation model, types ofoperations, performance objective and the 5P’S, I will systematically makea comparison and contrast among them. Finally, a conclusion will be drawn. 1.
Problems of the three companies1. Executive Holloware Ltd.’s problemThe main problem of Executive Holloware is the quality of its products,which causes customers returns, risen costs and low profits. Moreover, theyhave difficulties with the new process system and with staff concerningmotivation, communication and incentives.2.
London Zoo’s problemExperiencing the period of depression, London zoo has a consistentlyfalling attendance level. It is urgent for them to increase the visitor’snumbers and improve the service quality. While the problem is that they donot know what their customers exactly expect of their visits.
3. I’ll Phone you back: Oilpartz’s problemNitro chemicals, one of Oilpartz’s lager and profitable accounts, urgentlyrequired 20 components referred as NC11 within 2 weeks. But since havinggot abundant orders and owning limited resources, Oilpartz cannotguarantee to give Nitro Chemicals a hand. 3. Compare and contrastNow I’ll compare and contrast the problems of the three companies by usingthe operations management theories mentioned above.3.1 transformation modelIn Executive Holloware and I’ll phone you back, the materials are the inputtransformed resources, whereas in London zoo customers is processed.
It isobvious that the transformation process of the first two companies ismaterials processing while the last one is customers processing. Concerningthe input transforming resources, staff, information,buildingsandequipment are included in three cases, but for holloware and oilpartz italso includes technology and machinery. In London zoo, animals can betreated as the transforming resources because the happiness of animalsdirectly influences the quality of service (customers’ satisfaction andexpectation). All of them have to face the problem with their transformingresource: holloware can not sufficiently motivate their staff to performwell under the new processing system. Oilparts meets the problem with itscapacity since owing fixed numbers of machinist and machinery to be usedfor production.
London zoo has difficulties to attract visitors withoutnoticing what visitors concern about is the happiness of animals.As I mentioned, the transformation process is materialsprocessing.Materials go through a process that changes their physical properties(shape and constitution). So their outputs are tangible, transportable,storable, non-simultaneous and low customer contact. Compared with them,customers in London Zoo are processed in a way of changingtheirpsychological state, e.g. a good day out and being happier afterwards.
Services are its output, which are intangible, non-storable, simultaneousand high customer contact. For Holloware and London Zoo there lies aquality problem in their outputs: Holloware produces the products with lowquality. The tableware has got scratched and bruised during the process,which leads to customer return and re-working costs.
Zoo does not identifythe expectation of their customers so that the attendance level has beenfalling. It is easy to be seen that over past several years, the attendancelevel can reach 1000 per day on busiest times whereas by 1990s the averagevisitor levels were just over 8000. On the contrary, Oilpartz doesn’t getinto trouble with output quality but output quantity.
According to theirworking hours, they are not sure if they can not only fit in Nitro’s orderbut also accomplish other orders on time.Here, I would like to mention the theory ‘the process hierarchy’ further toanalyze the problem of Holloware and London Zoo. The transformation processmodel can also be used within operations. Look inside most operations andthey will be made up of several units or departments which themselves actas smaller versions of the whole operation of which they form a part(Slack, 2001). The whole Holloware operation could be termed a macrooperation, while its departments, such as pressing, plating, polishing, canbe termed micro operations. These micro operations have inputs to supplyother internal micro operations and also get outputs from others.
So theyform internal customers and internal suppliers. As the case mentioned, morelow-quality products would come out after every stage of procedure, whichproves that internal suppliers fail to provide high-quality resources tothe internal customers, e.g. plating workers may receive the teapots withscratchs from pressing shop. Obviously, during micro operations, problemhas turned up, Holloware as macro operation is unable to avoid theappearance of defective goods. Similarly, without completely useful inputsfrom information system, London Zoo would not be the customers’ favouriteany more.3.
2 4Vs and Performance ObjectivesAfter dealing with the transformation process I will proceed with the typesof operations. Four different types are distinguished: volume, variation indemand, variety and visibility. We have a combination of the types ofoperations at Holloware, which is related to low unit costs: high volume,medium variety, moderate variation and low visibility. Their turnoverreflects it-though having quality problem they can still make profits.Although the processing of Oilpartz also belongs to material processing asHolloware, low volume differentiates it from Holloware.
The aim the latterone tries to fulfill is to get both quality and quantity while sinceproducing very complex, special components, Oilpartz strictly control theworking hours in order to guarantee their quality (no one would do morethan 10 hours of overtime per week) concerning the other three Vs, both arethe same. There is different at London Zoo. Its combination of operationstypes is associated with high unit costs: medium volume, high variety, veryhigh variation and high visibility. The financial figures show: althoughthe numbers of visitors increased in 1994/5 there was still a deficit inrevenue, which only offsetbyaprivatedonation.
Itistheunpredictability of the demand that leads to revenues to be not stable.Actually, the transformation process as well as the types of operations isboth covered by the operations’ overall performance objectives that includequality, speed, dependability, flexibility and cost. They apply to variousoperations, but each of them has different significance. On other words,different organizations seek to different performance objectives in theirwhole operations. The similarity of three companies is to build up high-quality products. The difference is though Holloware and London Zoo treatquality as a very important goal to achieve – respectively of theirproducts and of their services-both of them have the problem with thisobjective while Oilpartz does not have the real quality problem and justwant to maintain it.
The quality problem in Holloware can be defined as thequality specification-actual quality gap. It wants to provide a premium,error-free product without scratches and bruises, which is not the casethus negatively affecting their profits. In fact, at present,onlyreworking and returns may cost them more than 12000 each month (Slack,2003). London Zoo intends to provide a good service for the visitors (agood say out), but the marking positioning is not suitable and customersinvolved in a state of dissatisfaction , which can be classified into thequalityproblemnamedthecustomer’sspecification-operation’sspecification gap and is shown by their reach results: from the prioritysores we can note that what visitors more expected from their visit is’visibility of animals’, ‘happiness of animals’, ‘care of animals’ and’overall, as day out’. Hence from the performance scores, it is claimedthat London Zoo has a very poor performance in the first two aspects(Slack, 2003). Here, the manufacturing company knows that there is aproblem with quality whereas London Zoo does not realize whether theircustomers experience a good quality service or not.
Compared with them,Oilpartz had about 30 regular customers and all the time provided theproduct with exceptionally high quality to them. It is the reason why theyare successful. While now they have limited capacity (I will talk about itin details later), therefore, before making decision if they accept theorder from Nitro, it should balance the relationship between the qualityand the quantity.High quality can reduce costs and increase dependability. Although almostevery company tries to reduce costs for more benefits, in I’ll phone youback case, Oilpartz much more emphasis on the dependability or reliability,which is embodied on controlling working hours in order to accomplishaccurate components or trying to help customers when they asked for aquicker delivery. If the quality of the product or thequality of thedelivery decreases, the reliability gained from customers goes down.
Similarly, the reliability is especially relevant to Executive Holloware:the products should be delivered as promised which gives stability andproves reliability. A problem will assumingly arise with reliability when agreat deal of tableware needs to be reworked, which lengthens deliverytimes. Dependability is judged in London Zoo when service is delivered:whether animals are cared as properly as the zoo promised, whether openlytimes are consistent. Opposing to Oilpartz, both Holloware and London Zoomore strengthen on the cost objective.
They face or will face the financialproblems resulting from already mentioned problems above. On one hand,London Zoo keeps very high fixed costs because it is necessary for them tohire staff and maintain facilities to breed animals and serve people,whereas the income is quite unpredictable. On the other hand, governmentare not willing to subsidize it any more, which confronts the company withthe change of being self-supporting. Doubtlessly, reworking and customerreturns-as results of bad quality-increase thecostsofexecutiveHolloware, at the same time, decrease their profits.The last important objective is flexibility for three companies. It seemsno one is involved in flexibility problems.
3.3 5P’sNow, I shall move on to discussing the so called “5P’s” which stands forproducts, process, plant, programme and people.Agreement between the demand of customers and the production of productsmust be reached on such matters as: performance, quality, reliability,quantity and so on. Executive Holloware’s products are tangible, namelypremium tableware. According to the Quality Assurance’s Survey, scratchesand bruises occur on 20% to 30% of the products. On this point, the qualitythey supply doesn’t agree with what customers demand, which is diagnose asthe quality specification-actual quality gap.
No wonder customers returnedpurchases. London Zoo’s product is intangible service. Its problem is whatthey produce is not the service customers want, which can be diagnosed asthe customer’s specification-operation’s specification gap.
In one word,the main difficulty facing both of them is quality control and planning.In contrast, Oilpartz’s problem lies in the processes (the second P),mainly in capacity control and planning. In deciding upon a process it isnecessary to examine such factors as: available capacity, available skills,type of production, layout of plan and equipment, safety maintenancerequirements, costs to be achieved (Keith Lockyer, 1988). Among themavailable capacity is the bottleneck of Oilpartz’s problem.
Oilpartz’sprocess can be defined as batch process and layout type could be bothprocess and product layout. It has three limited capacities: for processingmachinery, for operators and for processing time. They restrict theavailable quantity of products, which influences the available capacity forextra work. In this case, there are four basic procedures to produce acomponent, which are turn, mill, drill and grind. From table 23.1, we cansee that Oilpartz has got four new orders. Take Alpha Oil for example, thetotal operations hours (demand) for its order are 145, so there are 15hours slack left before 160 hours delivery time (load), which means extratime could be used to produce extra components.
In the same way, it is easyto calculate the other orders slack. If the total slack hours couldentirely cover the operation hours from Nitro’s order prior to 2 weeksdelivery time, it proves that Oilpartz has enough time capacity to satisfyNitro. In fact, it is a big problem that there only exist four highly multi-skilled machinists and five machines (capacity).
Though enough time isavailable, it is still impossible to get more products without workers andmachinery. Processes in London Zoo involve the way in which the visitorsare being led around the area or how they walk through the zoo. Its layouttype mainly depends on the perspective being taken when looking at the zoo.It could be a product layout because the visitors (as ‘transformed’resources) ‘flow’ along a ‘line’ of processes (arriving different scenes,watching different animals). On the other hand, it could be a fixed-position layout where the animals positioned in a certain place are watchedby visitors, which means problems will appear when demand is in excess ofthe capacity levels. At Executive Holloware the process type is also abatch process and the layout type could be process as well as productlayout the same as Oilpartz. Process problem turned up as there are a greatdeal of in-process rejects caused by bruises, scratches and dimensionalinaccuracy.
This probably results from the introduction of a new processsystem. Under this system, workers are paid by volume, which means thatthey care less about quality than quantity. It is logically inevitable tolead to the quality problems described above.
Plant is the third P. Generally speaking, it consists of buildings andfacilities and questions, such as design and layout of buildings andoffices, maintenance of performance, social responsibility and futurepossible demands (Muhlemann, 1992) should be considered. There are inputtransforming resources in the transformation model, which were discussedabove. Here, there will not be many details.
However, since there was alack of investment in Zoo’s infrastructure the plant of London Zoo was areal problem in the past. At the same time, with the appearance of a numberof alternative leisure attractions with new, fashionable plant, more andmore Zoo’ common customers were attracted away. Furthermore, due to anumber of socio-economic changes people found it easier to go further fortheir leisure activities and are more willingtodoso.Socialresponsibility is also Zoo’s problem. The public’s perceptions of animalrights, welfare and care have changed so tremendously that the existence ofzoo is questioned.
Thus, London Zoo has to take on the responsibility totake good care of their main capital-animals. Executive Holloware andOilpartz do not have such a problem with their plant. But maintenance ofperformance in terms of quality is Holloware’s problem since premiumproducts with high quality build up their reputation. From Oilpartz’s pointof view, the maintenance of performance is consistently to provide highquality products and reliability to their customers.Programme is concerned about operations scheduling. Compared with Oilpartz,there does not seem to be problem for the Zoo.
What they care about is notto make customers spend too much time waiting. However, executive hasdifficulty with timetables after their large number of rejects leads tolots of rewording, which generates a backlog ofworkduringthemanufacturing process so that they can not keep to their promised deliveryschedules and lose reliability. Concerning Oilpartz’s problem with capacitycontrol and planning, reasonable scheduling of operations is crucialconcerning the operation time for each order at each machine, the servingsequence or overall for all operations. Because there are two turningmachines, the maximum hours available per week are 80 for turning while theother three processes only can have 40 working hours since only one machineis available for each procedure. Four multi-skill machinists work 8 hoursper day and 5 days a week. Only 10 hours of overtime working can bepermitted per week. Therefore, when Oilpartz schedules the five orders,following factors have to be considered: the machinery hours, availablemachinists, working hours per week, deadline for delivery priority to NitroChemicals’ order.
At the end of the coursework, there are four schedulesattached, which are designed respectively according to the sequencing:FIFO, DD, LOT and mixed sequencing, to be helpful to solve its problem.Figures on the horizontal link stand for working hours. The vertical namesare customers. The numbers below working hours link stand for week. Thehours for each operation are expressed by straight line and the capitalletters following lines are deadline for delivery.
For the fifth P-People-staff as well as customers will be looked at.Executive has indeed problems with staff. It is staff that causes qualityproblem. It is lack of motivations and incentives for high quality sinceworkers care more about quantity which can bring higher wages.
Anotherproblem related to this is the pressure staff gets from the management inorder to keep output at certain levels. A communication problem betweenmanagement and workers causes a mismatch between volume and quality. TheLondon Zoo has the problem with customers. As we mentioned above fromAppendix 32.5 the most important aspects of a visit to the zoo are 1.
happiness of animals 2. visibility of animals 3. care of animals 4.overall,as day out. However, it is not featured that the zoo has good performancein these aspects; in fact, the first three of them can be grouped into theten worst rated aspects.
So it is necessary three the zoo worried about itsquality of service apparently, they failed to meet customers expectation:while the overall as day out 2.professionalism: care for animals 3.commitment to animals and 4.
conservation organization. What customersprefer is the animals are being taken care of rather than customerthemselves are being taken care of. The changes in society attitude cause afalling number of visitors.
Similarly, satisfying customer’s urgent demandsgave Olipartz pressure. Since Nitro Chemical is its big profitable customerand has good business relationship, which it Olipartz does not want todisappoint Nitro Chemicals. On the other hand, it must accomplish otherorders so that to keep its reliability. All customers are sources ofactivating company. The problem is that Olipartz is not willing to ignoreany customers. 4.
Conclusions And RecommendationBoth Holloware and London Zoo have the problem with quality control andplanning -respectively in products and service. Since the payment systemand the incentive for quality are not very sufficient, Holloware staffs whohave performed poorly are partly the source of their quality problemwhereas the problem in London Zoo is caused by the change in societyperception of animal rights and care.Together with quality control and planning problem, the first two companiesalso meet financial problems with the different reasons: for Holloware,reworking and customer returns reduce profit margins. For the zoo, not onlyreduce subsidies but also the falling attendance level decreases therevenues.I’ll phone you back meet the trouble with the capacity control andplanning. Hence, according to attached four schedules, we can conclude thatOilpartz can accept the Nitro’s order without overtime working and anydelay.The following suggestions can be deduced from the analysis of problems:Executive Holloware should totally change its payment system.
Workers arepaid according to both quality and quantity instead of only according toquantity. Furthermore, the company could strengthen the corporation amongmicro operations and introduce total quality management. London Zoo shouldimprove the position of animals to cater for visitors’ expectation.
If theycould improve the visibility and the happiness of animals, more visitorsmay be attracted. Actually, the awareness of problem has already beenresult in the zoo’s mission statement, but it should be improved inpractice. In addition, mastering more information about its competitors andchangeable environment can help them to avoid being misleading. ThoughOilpartz could solve its problem after reasonable capacity scheduling, forthe long term performance, it is better to build up inventory to meetunexpected demands.BibliograghyJonston, R., Chambers, S, Harland, C.
, Harrison, A. and Slack, N., Cases inOperations Management, Pitman, 1997 (Second Edition)Muhlemann, A. etal., Productions & Operations Management, Putman, 1992Slack, N., Chambers, S., Johnston R., Operations Management, Pitman, 2001(Third Edition)