PROBLEM STATEMENT: From the owner’s perspective, the company is doing well. In fact, they are the number three player in the industry. However, the HRD manager is having reservations regarding the manager’s position. In the last three months, the plant has been operating at only about 70% capacity and the inventories are piling up. He is concerned whether the operations strategy currently employed by DPC is appropriate to its line of business. ANALYSIS:
DPC is a company engaged in the repacking of food-based products such as powdered products like coffee, sugar, crème and liquid items like catsup and other food sauces. It has a 1,500 square foot facility in Las Pinas, and provides four product lines: (1) Liquid portion packs, (2) Powder portion packs, (3) Hot cups, and (4) Special projects. These product lines are then classified as: (1) Contract packaging services, (2) Toll manufacturing services, and (3) Packed products (all in). Areas of improvement for operations
1. Unreliable demand forecasting
The company knows that their clients will order at a certain time but it does not know how much. As a result, the company continuously produces so that it will have products available just in case a client registers an order. This policy results in overstocking raw materials and finished goods inventories. By packaging orders in advance of the customer order, they are compromising their products’ freshness. Advance orders are currently being processed due to the lack of orders in order to avoid underutilization of the plant. 2. Underutilization of plant capacity
3. Stock outs of resources
5. Marketing and selling
Location and plant layout
DPC could choose to move to a more accessible location. Las Pinas is not very accessible to a large portion of their target clientele. Big businesses in Ortigas or Makati will have logistical problems with DPC as their plant is relatively...