Case Stainless Steel - Group Case.docx

Philippine Christian University Graduate School in Business Management 1648 Taft Avenue, cor. Pedro Gil Street, Malate Manila ==================================================== MASTER IN BUSINESS ADMINISTRATION

Production Operations Management Case Study Analysis: Stainless Products Philippines Submitted by: NORMAND P. LACAP ARCHIELITO S. ESTRADA BERLIN O. PADILLA GERALD SAGUM

Submitted to Prof. Elzeber O. Murallos

Overview Stainless Products Philippines (SPP) is a small size manufacturing firm with a wide assortment of resistance-welded wire products.

Of the company’s annual business of

Php10,000,000, approximately fifty percent (50%) is accounted for by racks for holding dishes and glassware in commercial dishwashing machines, forty percent (40%) by point of purchase advertising display stands and ten percent (10%) by miscellaneous special orders for many different purposes. Recently, the management has received much advice regarding adoption of more specific management methods particularly, the need for an effective system of production control. So far, nothing had been done for three (3) reasons: first, there is reluctant to add to the overhead; second, the foreman has expressed considerable doubts to the value of such methods (he states that “I`m working as hard as is humanly possible and can`t bother to fool around with any more details.”); and third, the management feels that the company is so small that the present informal basis may actually be the most efficient way to operate.

Expansion has been

contemplated for some time, but there is some doubt whether the present organization could be expanded without complete reorganization.

Mr. Cruz is uncertain whether a change is

imperative! Time Context : Current Time View Point: Mr. Cruz, as stated in the case serves as the owner of the company and responsible on most of the management functions with the aid of his secretary. On the other hand, the company’s salaried foreman who has complete supervision of the workforce and handles most of the production operations (routing, scheduling, dispatching and inspection of the order).We can say that both Mr. Cruz and the foremen are the authorized people to implement any plan of actions that they deem effective and gives positive impact to the company

Problem : To be able to maximize company’s production based on market demand and capabilities of company; so as to establish the stability of the company and ensure its viability in production industry.

Objective: Must: To have a clear management process in its operation that will work through the current challenges of the company in its production process, delivery deadlines, employee overhead, quality assurance of products, customer satisfaction and future expansions.

Wants: To have a good production cycle that will accommodate all customers demand and satisfaction that will lead to company’s stability. Areas of consideration: STRENGTH:  SPP has experienced and skilled foreman.  SPP is profitable company (earning Php 10,000,000.00 annually).  Willingness of the owner to convert the some of the production to continuous from batch system. WEAKNESS:  Production know-how is vested only in one person.  No internal control both in production and sales.  There is no delegation of work.  Lack of records keeping.  Inability to assume the additional overhead expenses.  Lack of skilled personnel. Other than the foreman, all other personnel is ranked semi-skilled or if there’s any talented personnel they were unable to identify.  Unable to handle large orders request because organization and plant simply could not handle them.  Orders are side tracked (especially the disk rack) and delivery promises are not met and steady customers become displeased.  The foreman is an “old-school” man who is doubt of change.  The management feels that the company is so small that the present informal basis may actually be the most efficient way to operate.  Mr. Cruz is uncertain whether a change is imperative. OPPORTUNITY:  Company Expansion  Some of the employees can be promoted to advance production process and maximize their skills  Ability to maximize production output.

THREATS:  Competitors who have management control will be able to cater the products with customer satisfaction.  Unsatisfied customers may move to other competitors.

ALTERNATIVE COURSE OF ACTION ACA # 1 Formulate ordering and production process for the company to follow and integrate internal control to its process to accommodate information needed in management analysis as basis to company growth. Advantages     

Ability to track transaction process. Can be use as basis in internal control and references to enhance company operation. Can be used to formulate better process in company transaction. This will avoid company’s backlog and will enhance deliverables. This will identify company capacity and limitation that will helps a lot in decision making.

Disadvantages  They may need to hire an experts or consultant to start the process.  Tedious of recording transaction and may require additional manpower to do the recording and analysis of the records.  New protocol, new process that may lead employee dissatisfaction.  Needs extra hours/manpower for the consolidation of data from one module to other modules.  May result to redundant recording process.  May result to re-engineering of forms and official documents based on agreed process and formulation.

ACA # 2 Procure an electronic ordering and production system Advantages  Ability to track transaction process.  Can be use as basis in internal control and references to enhance company operation.  Can be used to formulate better process in company transaction.  This will avoid company’s backlog and will enhance deliverables.  This will identify company capacity and limitation that will helps a lot in decision making.  Availability of reports is on-hand.  Transaction are inter-related to other process.

 

Delegation, approval and tracking of transaction is easy. Consolidation of data is easy since it is saved in the database.

Disadvantages     

They may need to hire an experts or consultant to start the process. New protocol, new process that may lead to employee’s dissatisfaction. Needs to align business process based on automation requirements. The company operation may be dependent to computer process. Additional cost for the procurement of the system.

ACA# 3Hire additional skilled manpower who has the capacity to formulate company requirements on ordering, production and internal control needed. Advantages   

This will expedite production process. Can give better idea and resolution on company process. Better know-how process to the employees.

Disadvantages   

Additional Cost. The company may experience experimental process. Effectiveness of implementation procedure may depend on everyone cooperation.

RECOMMENDATION: The group recommends the alternative Courses Action number 2.

Detailed Action Plan Activities

Person Responsible

Search for the System Requirements

Procurement

Presentation and Demo

Procurement Provider

Installation of the system, Data Gathering, Databuildup and Infra deployment

System Provider

Training and actual Implementation

Users and Provider

Mile Stone

Budget

2 mos and

System

1 mo

5,000.00

2 mos

70,000.00

3 mos

650,000.00

PLAN OF ACTIONS:

ACTIVITY Meeting with Business Process Re Engineering Team & discuss the current situation, existing business process, current challenges of the company Meeting with the BPR team and check the proposed business process Planning & Assessment Planning & Implementation of New Business Process

PERSON-IN-CHARGE

DURATION

Mr. Cruz

7 days

Mr. Cruz/Foreman

1 day

Mr. Cruz/Foreman Mr.Cruz/Foreman/ Operation Employees

7 days 6 months