Operations Management

MGT 314.12

SUBMITTED TO:
Yurika Uematsu Bhuiyan
Lecturer, Department of Management
North South University

Submitted By
Group:Merchant & Co

Name ID

1 Arif Ishtiaque Zaman 133 0299 030

2 Fazly Rabby Bhuiyan 1330492030

3 Syed Fahim Ashhab 1411939615

4 Abdullah Al Hossain Dostogir 1421107030

5 Noor Uddin Sonek 1510450030

6 Ariful Haque Tonmoy 1512953030

7 Rezwan Kabir Anupom ID 1511795030

Date of Submission: 21thAugust, 2019

Table of Contents

page

1 Executive Summary 3

2 Brief description of the business 4

3 Analysis of the existing production and/or operations strategies 5

4 Application of production and operations management concepts, 7

5 Process map 11

6 Analysis of quality control issues 12

7 Analysis of demand forecasting 12

8 Operational problems 13

9 Recommendations for improvements in the operation of the business 14

10 Appendix 16

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1. Executive Summary

KPC Industry designs disposable paper cups that are 100% bio degradable. Company is

specialized and engaged in food service packaging. Current range of major products includes

disposable paper cup & plate in various sizes which are used for both hot and cold beverages

apart from other food service packaging products.

At present, the company is engaged in the manufacture and supply of disposable paper cups &

plates for serving beverages. The size range varies from 80ml to 350ml for cup and 7 inch to 10

inch for plate currently.

Goal

The world of smart disposable paper cups. KPC Industry designs disposable paper cups that are

attractive outside and of the highest quality inside. The exception is to sustain the earth with eco-

friendly materials.

Capacity

KPC have a production capacity of 5 million to 10 million cups & plates monthly and can assure

that any large requirements can be catered to. KPC herewith commit that we are in a position to

cater to an entire yearly consumption of a major international food division and provide excellent

service in addition to a consistent food grade biodegradable product.

Currently they have total of 168 clients.

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2. Brief description of the business

Concentrative products: Paper cups

 80ML Paper Cup

 100ML Paper Cup
 125ML Paper Cup
 125ML Paper Cup
 130ML Paper Cup
 150ML Paper Cup
 175ML Paper Cup
 200ML Paper Cup
 225ML Paper Cup
 250ML Paper Cup
 350ML Paper Cup

Other than these they also have a line of few products which is produced upon demands or
special orders.

 Paper Bowl
 Paper Plate
 Muffin Cup
 Tulip Cup
 Food Box

Specialties of the products

 Biodegradable and Environment friendly.

 Base used is 100% food grade with food grade poly lamination.
 Dimensional stability assured.
 Comfort in handling.
 Cup rigidity to contain liquid for longer period.
 Excellent Micro-biological levels.

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3. Analysis of the existing production and/or operations strategies
Quality:

Dimension Example

Performance Smart easily disposable paper cups.

Aesthetics Custom design to grant customer satisfaction.

Special Features Biodegradable and Environment friendly.

Reliability Hygienic.

Comfort in handling.

Durability Cup rigidity to contain liquid for longer period.

Perceived Quality Base used is 100% food grade with food grade poly lamination.

Serviceability Additional service after sales.

Price: Business is based on custom order system depending on order size and other variables

prices vary. But overall the order cost is affordable for mid to top level potential customers.

Time: Depending on order size and other variables delivery time may vary. On the other hand,

top notch Japanese manufacturing machine, work of efficient trained employee and well-

maintained management system allows KPC industry to keep delivery time as minimum as

possible.

Flexibility: As the business runs on custom smart disposable cups & plates, KPC industries are

very much flexible in terms of ordering their items. Flexibility of KPC industries is not limited

only to custom design but also delivery time, additional feature and many more.

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Products: The firm is currently involved in producing and supplying disposable paper cups &

plates to serve drinks. The size range for cup ranges from 80ml to 350ml and for plate presently

from 7 inch to 10 inches.

Process Selection & Facility Layout

Process Selection: The type of process KPC uses is “Batch”. Here, each day production is

considered as a batch. Each day can KPC produces 14300 paper cups and 7200 paper bowls

which is moderate compared to other process types.

Volume: KPC has machineries that are able to produce high volume of finished goods. They

have modern technology that is sufficient to produce according to the clientele’s demand. They

have capacity to produce 686400 paper cups and 345600 Paper bowls annually.

Variety: KPC have 6 different product lines in the disposable paper product category which

they produce according to demand from the clientele.

Flexibility: The flexibility available in KPC is very high. The machinery they use is enough for

their 6 varieties of product.

Layout Type: KPC follows the process layout. As the process type is “Batch” the functional

layout can handle varied processing requirements. The industry is situated in Purbachal, Dhaka.

As they are located vacant side of the city, they have ample space. The factory is well structured

and has enough facilities. They have an entrance gate which is covered with full security. After

entering the gate, we went straight to the admin located on the 1st floor of the facility. At the

right side they have parking for their delivery trucks. From there to little distance they have

their main administration building where they do their every works from production to storage

and all. The building has two side north side and south side. In the south side they have Admin

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and HR department. In the north side they basically have their operations and all. Before

starting the production, they send the raw materials to the quality management department

which is situated on the 1st floor. Right after the quality check they send the products on the

first floor where they have machineries department and paper products are produced over there.

After production the a few samples from each batch is sent to for durability testing. And after

that they put them on the delivery trucks and deliver through their distribution channel.

4. Application of production and operations management concepts

4V’s of Operations Management in KPC:

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Volume: Currently they receive regular orders from Nestle, Pepsi, BRB, United Hospital and

many more. These consumer goods requires mass volume of these paper cups that KPC

produces.. This suggests that the process is repeated and continuous/standardized and so, the

volume is high.

Variety- The product range is limited as they only make paper cups and plates. Recently they

have been trying to make square paper bowls. This suggests that they follow mass processes.

Variation- They offer different shapes and sizes for their cups according to the design preferred

by the clients. They have plates with various colors and now are trying to make square cups as

well. This suggests that they have a steady demand as people are becoming environmentally

conscious and thus increasing the demand of their cups steadily.

Veracity- KPC Industries factory and the head office is always open to visit for companies that

want to have a look at the facility before ordering products and want to specify their

requirements personally. They can even inspect the sample to determine overall quality or even

in between the processes.

Performance objectives

Current

New

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Quality- They use biodegradable material for producing their products which is now the most

required by many organizations. They try to maintain the quality by ensuring good quality raw

materials and proper employee management. This reduces mistakes but, those do happen.

Dependability- KPC is well known for its time maintenance, they deliver on time as their

processes have overall stability. They also maintain the conditioned cost at which they started

making the products. These products are durable until used and serve well as they are

biodegradable.

Flexibility- KPC has variations among their products but only has cup and plate as varieties.

They are flexible to the point of variations among cups and plates. The machine only produces

50 units per minute, which is an ideal situation. They cannot increase the production speed at

will if there is a change in order. Also, they can only produce one order at a time as they only

have 1 machine for each process. So the inventory increases and so does the cost.

Speed- Since KPC is a small company, they can only produce one order at a time. Though they

are getting orders but, if other competitors come up with the same biodegradable materials for

this business, KPC would lose market. Therefore, speed must be increased along with efficiency

of workers.

Cost- The cost of KPC’s operations is seen to be a bit higher. This is because of the raw

materials being imported. These materials are biodegradable and because of low exposure, they

have to spend more awareness. Due to their lack of speed and flexibility, the cost is high. This

puts a pressure on maintaining quality product.

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To solve this issue, they can take steps to collect those raw materials from the home country, buy

machines, train employees and find a bigger space. That way, they can produce more in less

amount of time and achieve economies of scale which will ultimately lower the cost.

Quality control Of KPC products

KPC QC team maintains a desired level of quality in a product or service. They check various

factors that affect the quality of the product. Their Quality control team aims at prevention of

defects at the source, relies on effective feedback system and corrective action procedure. They

use the industrial management technique by means of which product of uniform acceptable

quality is manufactured. They audit the entire collection of activities which ensures that the

operation will produce the optimum quality products at minimum cost.

The main objectives of the KPC quality control team are:

 To improve the companies income by making the production more acceptable to the

customers i.e., by providing long life, greater usefulness, maintainability, etc.

 To reduce companies cost through reduction of losses due to defects.

 To achieve interchangeability of manufacture in large scale production.

 To produce optimal quality at reduced price.

 To ensure satisfaction of customers with productions or services or high quality level

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5. Process map
Process map of KPC is a typical small corporation mapping where activities usually start from
ordering the raw material to finished goods of the products.

3 different major tasks are performed by the employees.

1. Print (one machine used)

2. Paper cut (two individual machines used)

3. Shape paper (eight machines)

Order of raw
material

Print according Paper cutting in Shaping the

to order order of size paper to size

Check
every
100 cups

Delivery of
finished goods

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6. Analysis of quality control issues
3 different processes are performed in which all the tasks have quality assurance tests.

Employees’ recruitment and training: Quality assurances are done manually by each employee
within their stations. Each worker have to go few weeks of training in order to do this job.

1. After print every single sheet of paper are checked for defects.

2. After cutting is done, every 100 individual work in progress materials are checked for defects.

3. They have individual 8 machines to shape the papers into paper cups which are automated.
And quality check is done by the employee on each 100 finished goods.

7. Analysis of demand forecasting

KPC is an order oriented industry which has no demand to be exactly identified.

Forecasting based on client preference is fundamentally deciding the piece of the paper cups that

their clients habitually request the most. By figuring out which products are their clients' requests

more than different requests or the product empower them to process essential of those forehand

and by accurately anticipating the interest they can supply or deal all the more productively

making more benefit. For Example a decent number of worldwide brands, for example, Nestle,

Pepsi, Dano just as neighborhood presumed organizations like Pran, Hospital, Megna Group,

Ispahani Group and Igloo Ice cream are utilizing our products.

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On the other hand they also use simple moving average method for estimating dependent on past

information which resembles they midpoints number of ongoing real qualities refreshed as new

qualities and currently there is a demand for only 8million pieces of paper cups against the

demand of 60 million pieces of plastics cups across the country annually and for that generation

cost is higher than the plastic on the grounds that eco-friendly cup stays low it costs Tk1.50 per

piece where a comparable size plastic cup costs Tk0.90 at retail level. Once in a while it's so hard

to take orders from client by remaining that cost and these as a result of high obligation charge

and if government pull back the obligation expense for condition they can get a tremendous

commercial center at low cost and can fulfill up clients need.

8. Operational problems
Forecasting problem: KPC’s production is mainly based on orders so forecasting is hardly the
option for then. Waiting line problem: Raw material, Work in progress is maintained in
accordance to their order they have to the line distribution is not an option for them.

Managing overheads: In accordance to their orders the company runs in accordance. When they
have orders to deliver they stay open in nights.

Monitoring performance: Every employee is trained and left of their own thus resulting a week
monitoring. Capacity: They have a large capacity space which is the problem. Storage are not
well maintained.

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9. Recommendations for improvements

Optimizing Production: KPC Paper Cup Company is currently capable of producing 1 crore 50

lac cups and plates monthly but after analyzing the demand forecast, the assumption of

enhancing production is clearly visible; So, the company can improve expertise and systematic

optimization in different aspects to ensure maximum production within the resource.

Human Resource: Quality human resource is a valuable asset to the company. So by hiring

expert employees and workers is essential. Though KPC already has a good team of workers and

employees running all the operation but more efficient in production and IT expert will be

required for the company’s better performance. This will take the company into its benchmark

position in no time if they are perfectly compensated and motivated.

Optimizing Distribution: Due to lack of management in distribution, often leads to wastage of

goods, higher inventory cost and dissatisfaction towards the clients, As KPC is only focused on

their business of paper cup and plates it will be better for them to select an expert third party

distribution channel.

Promotion: As it is a B2B product, so the intense promotion among mass people is not required.

But it is important for KPC to convey the message regarding their products, offers, and facilities

towards their potential clients. As the business has an upper hand due to their 100% eco-friendly

product, this could be their value proposition and CSR to attract clients.

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Optimizing IT: A good support in information technology is a high requirement for KPC. They

have the transactions, orders, raw materials, salaries and wages and so on. So, an efficient IT

system can do all of these at once. Manual management can often lead to mismanagement and

mistakes which can cause great loss. Though the expenditure of setting up an advanced IT

system is high, but once it is setup it will provide service for a long run.

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Appendix:

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