Operations Management

GENERAL INSTRUCTIONS • All assignments are to be submitted on 8th April 2021 on www.atmsstudentportal.com with the login credentials  shared earlier. • Assignment if submitted to any staff or kept in cc while submitting the soft copy will NOT be considered for  marking. • If assignment is not submitted on date, will follow with penalty of 10% deduction of marks for every day. • Any Assignment submission extension request must come to Azra Fatima (Head: Examination | Academic) – afatima@atmsedu.org 5 days before the date of submission with a valid reason and supported documentary  evidence.  • Similarity between students work is strictly not accepted, any student found with similar work will be graded  Zero and fail for the course. However, Plagiarism is an academic offence and will not be tolerated. • Any reevaluation request should come in one week of grade release. Any late request will not be obliged. (Form  and other details shall be shared based on request) • Any rescheduling request should come and fulfilled within two months after the actual date of the assessment.  Any late request will not be obliged. • Assignment once submitted to exam board is final for marking. • Program participants are strongly advised to keep a copy of their work in case the submitted copy should go astray.  • Total 90 marks. 10 Marks for Class Participation. Final marks will be converted  to 90 marks. • Please refer the academic guidelines uploaded in the student portal for further  information. GUIDELINES FOR ASSIGNMENT a) If assignment is Question & Answer based then.©Al Tareeqah Management Studies – 2021 1 • Introduction is needed for each question. • Question has to be answered based on the mark allotted for each question with references if  any idea or information is taken from other source. b) If assignment is case based then, • Executive summary • Table of content • Introduction • Body of assignment (questions related to case need to be answered) • Conclusion / Recommendation if any • References (in-text + citation) to be used. Total Marks / 90 PLAGIARISM Plagiarism is a form of cheating, by representing someone else’s work as your own or using someone  else’s work (another student or author) without acknowledging it with a reference. This is a serious  breach of the Academic Regulations and will be dealt with accordingly. Students found to have  plagiarized can be excluded from the program. Plagiarism occurs whenever you do any of the following things without acknowledging the original  source: ✓ Copy information from any source (including the study guide, books, newspapers, the internet) ✓ Use another person’s concepts orideas ✓ Summarize or paraphrase another person’s work. How do I avoid plagiarism? To ensure you are not plagiarizing, you must acknowledge with a reference whenever you: ✓ use another person’s ideas, opinions or theory ✓ include any statistics, graphs or images that have been compiled or created by another person or  organization ✓ Paraphrase another’s written or spokenword. What are the penalties? The penalties for plagiarism are: ✓ Deduction of marks, ✓ A mark of zero for the assignment or the unit, or ✓ Exclusion from the program. Plagiarism is dealt with on a case-by-case basis and the penalties will reflect the seriousness of the  breach. Please note claiming that you were not aware of need to reference is no excuse.©Al Tareeqah Management Studies – 2021 2 Part A – Each question carries 10 Marks 1) A factory operates with 2 shifts. The total working hours in one shift is 520 Minutes, there  are two breaks per shift. Each break lasts 10 min. The factory received a customer order that  stipulates making 500 pair of shoes. What is the takt time (min per cycle)? 2) If the lead time in that factory is 2.5 minutes, can the factory under the current capacity and  productivity attends to this order on time. Part B (Minimum 1500 words for each question) Each question carries 10 Marks In this part of the assignment, you can choose any two questions out of the following three  questions: 1- In Today’s turbulent markets, international companies strive to dynamically change their  operations strategies to fit the dynamic and unpredictable economies. Which of the  following strategies is a better option for those companies: Global strategy or Multi  domestic strategy?  Discuss the pros and cons of each strategy in today’s turbulent economies 2- Just in time strategy is a strategy that aims to control production. Describe JIT strategy and  discuss its benefits in operations management. 3- What is scientific management? Who are the pioneers of Taylorism? What are the concepts  of Taylorism?©Al Tareeqah Management Studies – 2021 3 Part C (Minimum 2000 words for all the questions as a total) Each question carries 10 Marks 1- What is a balanced scorecard?   Develop a balanced score card for your organization or the one you work for. Ensure to  explain each dimension and to include at least 2 Key performance indicators for each of the Score  card dimensions.  2- What evidence exists to support that performance dashboards are beneficial for the  organizations? Part D  The Adoption of Lean at Nibbly Bits Bakery   Case  Author: Michael Chandler & Norman Faull  Online Pub Date: January 02, 2019 | Original Pub. Date: 2018  Subject: Employee, Industrial & Labor Relations, Operations Management, Organizational Theory  Level: Basic | Type: Direct case | Length: 4179 words  Copyright: © 2018 Graduate School of Business, University of Cape Town  Organization: Nibbly Bits Bakery | Organization size: Large  Region: Southern Africa | State:  Industry: Manufacture of food products Originally Published in:  Chandler, M. , & Faull, N. (2018). The adoption of lean at Nibbly Bits Bakery. Graduate School of  Business. Cape Town, South Africa: University of Cape Town. ©Al Tareeqah Management Studies – 2021 4 Publisher: Graduate School of Business, University of Cape Town  DOI: http://dx.doi.org/10.4135/9781526478054 | Online ISBN: 9781526478054  Abstract  The case concerns food manufacturer Nibbly Bits, which supplies a retailer (Woolworths) with rusks  and a variety of other baked goods. Despite receiving good orders at fair prices, the company has  battled to turn a profit. In addition, a series of worker-led strikes have plagued the company, which  has led to an uncertain future. The operations department, headed by the main protagonist, Stefan  Drees, endeavours to solve the issues through implementing Lean principles in the factory despite a  lack of support from upper management. Several initiatives are implemented with varying degrees  of success.  There are two main themes that run throughout the case. Firstly, there is a strong emphasis on the  company’s employees and how Lean management practices can assist in improving a poor work culture. Fostering an inclusive culture helps to improve productivity and employee happiness. The  second theme relates to process improvement. The production processes are described along with  interventions that the operations manager uses to make changes in line with a Lean approach to  problem-solving. ©Al Tareeqah Management Studies – 2021 5 Case  It was late July 2015 and a two-week strike at Nibbly Bits Bakery had just ended with both  management and the employees feeling battered by the experience. This was becoming an annual  event and Stephan Drees, operations manager, sat in his office feeling completely exhausted. He was  responsible for the negotiations and had proposed a wage increase across the board in line with CPI  1 inflation. The union was supported by around 70% of the employees and had demanded an  increase of double the amount on offer, citing that the employees were being paid below the  industry average. The truth of the matter was that the strike was not only about the money, it was  also symptomatic of other softer issues such as the attitude from management that affected the  employees daily. However, these were somewhat difficult to accommodate as a part of the wage  talks.  Negotiations between Stephan and the union representative had broken down as neither side was  willing to budge significantly from their position. A general strike was called, which resulted in the  loss of 16 days of production, translating to approximately 120,000 boxes of rusks and other baked  goods. The employees lost out on wages and there was intimidation of the workforce who did not  choose to participate in the strike action. Ultimately neither side gained much after a slightly revised  offer was tabled and accepted after the workers ran short on money and lost faith in the ability of  their union representative to handle the matter. Stephan knew that everything was not well in the  company operations. He was aware that both he as well as his direct report Bernd Strauss,  production manager, had something of a reputation in the factory. They were actively disliked by the  shop floor employees. Labour unrest on its own was bad enough, but the company was also facing  major challenges elsewhere. For the last few years Nibbly Bits had not been able to turn a profit. The  operations department was characterized by excessive costs, mediocre productivity, and continuous  metaphorical firefighting. The gross margin was in line with industry figures; however, high staff  turnover, training costs, inefficient production, and discarded product greatly impacted the finances.  The future of the company was threatened and something needed to change.  1. The Company  Nibbly Bits was an industrial bakery based in Wellington, a small town in the heart of the Cape  Winelands District of South Africa. The company functioned as a white-label manufacturer with a  longstanding contract to supply Woolworths (a major South African food and clothing retail chain)  with a range of handmade 2 premium rusks and other baked goods.  The company was founded in 1996 by Pieter Haasbroek who had previously worked for Sasko, a  large commercial bakery that manufactures more than a million loaves of bread a day. Sasko had  been approached by Woolworths to bake their range of rusks but had declined based on the small  quantities requested at the time. After retiring from Sasko, Pieter seized the opportunity and started  Nibbly Bits in a small space that Sasko allocated to him within the Sasko bakery. Pieter later moved ©Al Tareeqah Management Studies – 2021 6 to a rented 990m² factory in Paarl with around 60 employees. They began by baking rusks for  Woolworths as well as for Spar (another South African retailer).  After a steep initial learning curve, a strong focus on quality control led to well-received products.  Stephan joined the company as operations manager in 2003.  In 2004, the company’s success meant that it was possible to build their own larger 3,000m² factory  in Wellington to house their growing production and staff contingent of 150 employees. By 2010,  Nibbly Bits had grown to 5,200 m² with 700 employees, of which 400 were permanent staff and 300  were casual employees. Pieter Haasbroek’s son, Andre, joined the company at this time taking on  the role of CEO as Pieter began to step away from the day-to-day running of the company. It was  also at this time when Bernd joined Nibbly Bits in a production management role. The company was  reorganized into three separate divisions, including a biscuit factory, snack factory, and distribution  centre. Nine Nibbly Bits factory shops were subsequently opened around Wellington, Paarl and the  greater Cape Town area.  There they sold broken rusks and other baked goods deemed out of specification for Woolworths.  The company’s strong and consistent growth followed the increased popularity and customer spend  on premium food products. The rapid growth of Woolworths contributed directly to that of Nibbly  Bits. A strong long-term relationship had been built and maintained with Woolworths, and while this  ensured large orders and consistent production, Nibbly Bits was required to sign an exclusivity deal  with Woolworths, the contents of which stated that they could not supply to any other retail chains.  The product range grew significantly over the years. What began as a single rusk contract expanded  into multiple product lines including artisanal biscuits, cakes, rusks, savoury snacks, and popped  snacks. Seasonal orders such as Christmas-themed biscuits or shortcake also accounted for a sizable  portion of the production.  2. The Industry  The Western Cape is home to most of the niche food producers in South Africa. Nibbly Bits was  among several suppliers to Woolworths in the area and found itself in a situation typical of the  industry. The socio-economic situation in the Cape Winelands, and much of South Africa, meant that  many of the employees had limited education, wealth and job prospects. Each wage earner was  generally supporting an extended family. Overtime pay was highly desirable among the employees,  and this additional income was often a necessity for meeting their monthly expenses.  Unemployment rates of above 30% also meant that there was a high demand for the jobs that were  available, despite the industry’s typically low wages. The social divide in the industry was also  significant as it was normal for management to earn 10 or even 20 times the salary of shop floor  employees. ©Al Tareeqah Management Studies – 2021 7 With the low education and skill levels, along with a large amount of manual labour and little  automation, the management system in the company tended to be very hierarchical. There were  seven tiers separating shop floor employees from senior management, meaning there was a  significant disconnect between the parties. Despite jobs being highly valued, the staff turnover rate  was also very high. This generally occurred when staff was dismissed for one of several reasons but  most often absenteeism. In line with South African law, company policy stated that an employee was  liable to be dismissed if they were absent without reason for three days or more, or if they missed  several other days and had exhausted their verbal and written warnings.  Another issue in the factory was the level of diversity among the management and employees.  Andre was Afrikaans, Stephan was French, Bernd was German, and the other employees were  mostly of either Cape Malay or Xhosa descent. Additionally, the official language of the company  was English, which very few employees spoke as a first language. This led to challenging  communications at times.  Both Stephan and Bernd were pastry chefs by training. It stood to reason that managers in the  industry had a background in food. Indeed, this strong technical knowledge was an asset when it  came to troubleshooting recipes and optimizing baking processes. Being chefs also meant they were  used to managing a kitchen, typically a high-stress environment, so moving from that to a factory of  700 employees required some adaption and a growth in management experience necessary for  larger workforces.  3. Decision Time  After the strike was over, Andre called Stephan to a meeting. They desperately needed to discuss a  way forward and prevent a reoccurrence. Andre also reiterated to Stephan as he had done many  times before that Stephan really needed to improve his department’s efficiency through reducing  operating costs. Around the same time, Stephan had been offered some company-sponsored  training days, in line with the company policy for staff who had been with Nibbly Bits for an  extended tenure. Stephan had chosen to do an “Introduction to Lean” course at the Lean Institute  Africa in Cape Town.  Stephan had become familiar with Lean a couple of years prior and had read several books on  Toyota and the Toyota Production System. His initial understanding of Lean was as a tool for  reducing waste in a company. At the time he found it interesting but had his doubts around how  effectively it could be applied in a bakery environment where batch production was a necessity. ©Al Tareeqah Management Studies – 2021 8 Many of the concepts he had read about seemed rather abstract and he didn’t think he understood  the meaning of “capturing the essence of Lean management” or a “Lean cultural transformation”.  However, after the course he felt that he had picked up some skills and could attempt a “Lean  implementation”. He was also now desperate and willing to try anything. He reasoned that there  were certainly aspects of Lean which could benefit the factory. Hopefully the factory would run  more efficiently leading to increased profitability, the result being that they would have the option  to increase salaries and implement bonus schemes, leading to happier staff.  Andre felt that the problem was related specifically to the employees and that replacing as many of  them as possible, or even moving the factory elsewhere, was the way forward. Stephan was of a  similar opinion but felt it was worth a try. He also had a sneaking suspicion that management,  himself included, were contributing to the problem. Stephan was also at a stage where he felt that  his job as operations manager was no longer progressing. He needed to either take drastic steps to  implement some changes or resign from his position and move on to something else.  4. Operations at the Bakery  The bakery ran on a three eight-hour shift system, where the employees rotated on a fortnightly  basis, generally taking turns working the night shift. Each shift was overseen by a shift manager, who  worked the same hours as his or her team. Management along with maintenance generally worked  normal office hours, which aligned with the day shift.  4.1 Scaling and Batching  The ingredients were portioned for a batch. Firstly, a production order sheet was received and  printed. This sheet gave the batch’s product name, the proportions of ingredients along with a  unique barcode identifier which followed the batch throughout the factory. Dry ingredients such as  flour and sugar along with butter and milk were placed in large plastic containers on trolleys in  preparation for mixing. A scaling section worker suggested it was difficult for one person to lift and  move a container once it was full of ingredients; at this point it could weigh up to 50 kg.  The floor area around this station was generally cluttered with multiple containers. Since several  batches were in the pipeline, and there were multiple containers available along with a ready supply  of bulk materials, the staff in scaling tended to pre-assemble as many batches as possible for the  day, regardless of the demand from the next station. ©Al Tareeqah Management Studies – 2021 9 4.2 Mixing  This stage was relatively simple. The ingredients were blended in large mixers for 10 to 12 minutes.  Timing was critical: If the ingredients were mixed for too long, nuts and fruit pieces tended to break  down and the dough mixture became overly stiff; for too short and the ingredients were not  sufficiently distributed and blended.  Batches were sometimes mixed at a higher rate than production could work them. This caused a  build-up of mixed dough. The dough had a limited shelf-life once mixed and could spoil if not worked  in time.  4.3 Production  The rusks were shaped and placed onto baking trays. The thickness of the dough needed to be  consistent to produce rusks of uniform size and weight according to the specification. Division lines  were carefully scored into the upper surface to allow for easy breaking after baking.  Employees occasionally dropped dough on the floor during this step. In line with the food safety act,  this had to be discarded as it was declared unfit for human consumption.  4.4 Baking  The trays of rusks were then placed on rotating racks in paraffin-fired ovens at 180°C for between 20  and 60 minutes, depending on the type of rusk. The ovens were programmable for both  temperature and baking time. Batches had been ruined when the wrong baking times or  temperatures were used, although this was not a common occurrence. 4.5 Breaking  After baking, the rusks were crispy but not hard. They were then split along the score lines by hand  using stainless steel spatulas. Some rusks were potentially compromised during this step if they did  not break evenly and would then be considered factory seconds and sold at one of the factory shops. ©Al Tareeqah Management Studies – 2021 10 4.5 Drying  The separated rusks were placed onto racks in electrically powered driers. The rusks needed to be  placed on racks in a random order, different from the sequence in which they were broken. This  promoted better drying as the uneven surfaces let more warm air through to facilitate the drying  process. Relative humidity, as well as the ambient air temperature, affected the length of time that  the rusks needed to spend in the driers. Cross contamination was a concern. It was necessary to  keep certain batches apart from one another, for example the stronger aniseed-flavoured rusks  could not be dried at the same time as buttermilk rusks.  4.7 Packing  The packing line had no automation because of the large variety of products being packed as well as  their generally fragile nature. Woolworths branded packaging was supplied and then the products  were portioned, heat-sealed and packed by hand. Some products were packed on quantity, for  example 12 Aniseed rusks, while others were filled on weight. Woolworths specified upper and  lower limits for product weights which had to be strictly adhered to. The work at this station was  both time-consuming and labor-intensive and as such approximately a quarter of the shop floor  employees were based here.  4.8 Metal Detection  The sealed boxes were then sent through a highly sensitive metal detector. In order to comply with  Woolworths’ quality standards, this step was necessary in the unlikely event that metal shavings or  other pieces had contaminated the product at any stage of the manufacturing process. If anything  was detected, the whole batch had to be pulled and the source of the metal investigated. Obviously,  the detector could not detect glass, ceramics or other organic matter. If any foreign object was  reported by a customer, Woolworths issued a non-conformance notice against their supplier as well  as a fine of approximately R20,000 per infraction. The funds from the fine could be used for staff training purposes at Woolworths’ discretion.  4.9 Dispatch ©Al Tareeqah Management Studies – 2021 11 Products were palletized and stored in an adjacent warehouse after which they were shipped to a  Woolworths distribution centre. The level of stock in the warehouse fluctuated based on demand  and production efficiency. Since some products could take up to two days to produce, depending on  drying times, Nibbly Bits liked to keep a certain level of buffer stock to ensure instant dispatch to  their customer.  5. Implementing Lean  Stephan needed to decide on where he would act. He had created an expectation with Andre that  there would be tangible improvements in the short term, so he needed to focus on these results first  to gain support for his Lean ideas. The next logical step after having audited the operations was to  begin targeting the proverbial low-hanging fruit.  The following six-month period was busy for Stephan. With the assistance of Bernd, he started  implementing changes in the factory. There was a general clutter of old machines and surplus  equipment. The rationale around keeping them had been that they may be needed for future  production. After asking the right questions, Stephan realized that most of the equipment had not  been used for years and some had simply been dumped there when they moved into the current  premises. The solution was to move some of the more valuable equipment to a separate storage  area while the rest was disposed of.  There were other immediate tangible improvements that could be made. Surplus hand tools were  removed, work spaces tidied up, and the remaining items were color-coded per station. The factory  floor had previously been demarcated; however, this had not kept up with changes in the  production lines and so tape was applied to the factory floor demarcating where items should live  and where carts could travel.  Bernd lamented on the recent changes:  “The factory certainly looks smarter. We are starting to perform better in our food safety audits as  well. The number of non-conformances has dropped dramatically from around twenty last year  down to about only five per year since we started doing this.” ©Al Tareeqah Management Studies – 2021 12 5.2 Implementing One-Piece Flow and Pull  Stephan decided that scaling and batching was the department where he could experiment with  some Lean concepts, see the results quickly, and then implement them elsewhere in the factory if  they were viable. He identified a problem relating to multiple batches of ingredients sitting for  extended periods of time in open containers waiting for mixing. The workers wanted to appear to be  productive. As long as there were order cards, ingredients to draw and containers to mix in, they  wanted to produce batches for mixing. The batches would sometimes spoil at this step and needed  to be discarded. A change in mindset was necessary.  This was a perfect place to start implementing one-piece flow and then pull. He chose to play a  series of games with the workers in the department to teach them the practicalities of the new  system. After assigning each worker to a station, they “manufactured” paper aero planes using the  Kanban system.  Everyone seemed to enjoy the exercise and grasp the concept. However, a few days later everything  lapsed back to the old system with batches again piling up. Then Stephan had a conversation with  Fezeka, the supervisor working in the area. She suggested that they use the trolleys as the  mechanism to run production. There would be only two containers and trolleys in a bay at any given  time. The operations department had purchased additional containers and trolleys the previous year  with the hopes that it would assist the department. Now they took away all but two per station: one  that could be ready for mixing, a buffer, and one container that was in the process of being  completed. This immediately solved the problem.  There was, however, massive resistance from some the employees in the department. They had  previously measured their own success through how quickly they could process the day’s batches,  which generally involved a mad rush in the early part of the day followed by idle time in the  afternoon. Stephan and Bernd needed to explain that they were not being judged on how quickly  they could produce all their batches but rather on quality and consistency. Gradually most of the  employees warmed to the new way of doing things.  A pull system was introduced through providing the order card to the mixing department rather than  scaling and batching. Mixing would only provide the next order to scaling and batching as they took  the buffer container. Again, this was successful and then needed to be extended throughout the  factory processes. ©Al Tareeqah Management Studies – 2021 13 5.3 The Shop Floor  A year after beginning Lean, Stephan commissioned a study to get the shop floor employees’ views  on the company and what changes if any Lean had brought. The following are summarized quotes  from the findings, voiced collectively:  “We are usually nervous when Stephan or Bernd walk around the factory. We are worried that they  will find something wrong and issue a warning.”  “Things have improved, but we still need to feel more respected and valued as employees at Nibbly  Bits.”  “The reason we belong to the union is because we are worried about losing our jobs. It is a form of  protection.”  “On Lean, we are on board with the concept, however we do not feel as if we are a part of the  change initiatives and the project is still being driven by Stephan.”  5.4 Daily Meetings  The operations department held a meeting from 9–10am daily. The purpose was to keep all  participants informed and accountable. Typically, the attendees included Stephan, Bernd, who  chaired the meeting, the shift manager on duty, the packaging manager, and the maintenance  manager. The meetings had an agenda that was seldom followed and normally the discussion  centered around firefighting, recurring issues, and blaming other departments where possible. The  meeting generally ran over time and often little was achieved.  A breakthrough occurred in January 2017 when Stephan implemented several major changes after  asking for some meeting advice at the Lean training event he had attended. He introduced a “Lean  clock” where the meeting was divided up by the minute hand’s movement, which the team would  strictly follow. He also removed the sense of hierarchy in the meeting by asking everyone to be  open, saying how they felt regardless of who they were addressing. A radical change was made by  inviting and including two shop floor employees to the meeting. These employees were rotated  daily. The idea was that the employees could raise issues that prevented them from doing their job  effectively. ©Al Tareeqah Management Studies – 2021 14 Many seemingly small problems with production were discovered by management this way. The  other reason for including the shop floor employees related to their perceptions of management.  Here they were able to see that managers were also busy and not just sitting in an office all day or  giving orders to employees. The employees attending also tended to gain a level of empowerment  and prestige through attending a meeting with management.  Bernd, as production manager, also needed to track, and if necessary, flag, steps in the production  process that needed attention. He introduced a chart where quality parameters were judged as  either being acceptable or unacceptable and marked as either red or green on a chart. Over a  period, the color patterns on the chart tended to indicate which departments required the most  attention. Another chart which was updated and discussed in meetings was concerned with tracking  wasted products. Discarded batches at any stage of production had a major impact on efficiency.  The total value of these losses was recorded weekly and solutions were discussed in the meeting.  Questions: (Minimum 1500 words for all the questions as a total)- 30 Marks 1- What are the challenges facing Nibbly Bits company? 2- What is lean? what are its benefits? What are the wastes that lean could reduce or  eliminate? 3- What are the issues frequently faced during scaling and Batching? 4- What are the issues frequently faced during mixing stage? 5- What are the issues frequently faced during production? 6- What were the two critical things that determined the quality of rusks during baking? 7- What were the critical things that determined the quality of rusks during Breaking and  Drying? 8- While implementing Lean, what waste was addressed when Stephan removed the surplus of  machines and hand tools? Which waste was reduced with the color coding of items and floor  demarcations for carts? 9- How lean helped the workers to organize their work with the aid of the pull system that  Stephan had invented? 10- How lean assisted in improving meetings efficiency?©Al Tareeqah Management Studies – 2021 15 11- What were the benefits of implementing quality parameters and why they were color  coded? 12- Discuss how can Lean help your organization