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Organization background
Organization Background
EA Cakes Ltd., New Zealand, is a successful food
manufacturing company Major share of the market in New Zealand and the Asia-Pacific region. It produces over 400 different kinds of fresh and frozen food products
Types of Products
Shelf stable and frozen food
and marketing staff on the one hand, and operations on the other hand. The time interval for budgeting was too long. The supply of raw and packaging materials required a longer time horizon.
Ineffectiveness of System
Losses in production
Objective
Complete redesign of its production planning system, which was an integral part of an ERP system that used SAP software
What managerial, organisational, and technological issues are related to this case?
EA Cakes Ltd. had decided to change its production and sales strategy for long and medium shelf-life products from MTO to MTS. The MTS strategy costs more in inventory than MTO, but it has two benefits:
Increased speed to market allows expanding the market share
by attracting new customers and by catching unexpected opportunities, and Capacity may be utilised more efficiently using the inventory cushions instead of capacity cushions.
The decision to change the strategy from MTO to MTS involves not only companys decision to invest much more money in accumulation and keeping stocks of finished goods, it requires a complete redesign of its production planning system.
How does the change of strategy affect the information technology applications?
There are several major reasons for making significant changes in production planning and IT applications: MTO is driven by customers orders, MTS is triggered by forecasts; a forecasting system had to be designed and implemented. There are no significant stocks of finished goods under MTO, so there is no need for stock management; for MTS, an inventory management system for finished goods had to be developed. Under MTO, there are no significant information links between the company planning and shop floor production planning. Under MTS, it is vital that the planning system preserves continuity. That means the plans produced by each level are detailed plans of the top level. Also, there must be feedback continuity: feedback of the top levels is an aggregation of bottom level feedback.
What are the possible alternatives, and their pros and cons, facing the organisation in dealing with the problem(s) related to the case?
The management of EA Cakes had two alternatives: To substitute the business processes of the company for the business processes implemented in SAP, and To create additional special software for providing computer support to production planning. The production planning system described in the case carries specific features of production planning of EA Cakes Ltd. Standard software (and SAP by definition is standard software), on the other hand, comprises programmes developed for an anonymous market.
What are some of the emerging technologies that should be considered in solving the problem(s) related to the case?
Business Process Implementation Collection of interrelated Tasks initiated in response to an event that achieves a specific result for the customer of the process The concept is central to many areas of business systems design; specifically to business systems based on modern information technology Substitution for previous functional design Business process involves several functional areas, and functions within those areas. Business Process in EA Cakes ( Production Planning System) Long-term company level Medium-term aggregate level Short-term shop level
company performance by BOD. Input comes in form of KIP by the board and marketing department. 2 budgets 1.)current rollover budget 2.) full budget two versions are than prepared. Sales budget aggregate production plan.
MPS inputs : Aggregate capacity plan for the next two months Actual stock level Short-term demand forecast Main Run-Scheduling performed at the beginning of the planned week Control Run When the feedback on actual production as available
Inventory Model
Opening stock +Production-Sales Forecast=Closing Stock
Functions of MPS
1
2 3 Produce feasible assignments for all product lines Keep desirable stock levels Implement a speed-to-market principle
daily subdivision) as specified by production lines. Scheduling constraints have been worked out. Set-up time, planned downtime are known. Main Run-Scheduling performed at the beginning to work out an optimal weekly schedule. Control Run-When feedback on actual production becomes available, the procedure is run for the rest of the period
What is the final solution that can be recommended to the management of the organisation described in the case?
The final solution is to use SAP. After implementation
The master scheduler has to check the capacity and to change the
production volumes according to available capacity. Then he must agree the changes with the Sales Department and the Production Department. This process will get automated.
Presently at EA Cakes Ltd., scheduling is only done on finished items.
components
each week. Sales managers must produce the forecast, and then it is automatically processed within the Master Production Scheduling. Sales figures for individual products have to be provided on a weekly basis for the current month and the next month. Actual sales made each week are captured and available for reporting on the following morning. Sales staff compares actual sales with long-term forecasts . Currently, forecasts are prepared manually and then put into the database. It needs computer support to relieve sales personnel and to eliminate data
Thank you