strategic operational issues
Topics: Inventory / Pages: 9 (2645 words) / Published: Jul 25th, 2014

Title: Strategic Operations Issues
Assignment topic
Using your own organisation or a local organisation that you know well, identify a strategic operations issue or problem that needs to be addressed. Describe the organisation briefly and briefly explain the specific operational issue, problem or process that needs to be addressed and provide clear details of its functions within the organisation; analyse the problem using a concept covered in the subject; consider the performance objectives of operations management; changes to performance objectives or outcomes; improvements; theory and recommendations for improving the system or operation.

Executive summary
Manufacturing plant operation issues of XYZ Plastics Pty Ltd
This paper studies the operations issues of XYZ Plastics Pty Ltd’s manufacturing plant. In the last three months, the plant experienced a decline in % OEE (% Overall Equipment Effectiveness) from 90 per cent to 81 per cent, the raw materials inventory increased 10 per cent from 900 tons to 990 tons and increased the outsource warehouse cost from $100 000 per month to $150 000 per month. The overtime cost was also increased by 50 per cent from $20 000 per month to $30 000 per month.
The analysis of the manufacturing process and workflow revealed that the root causes were:
a) Inadequate communication linkage between the Planner and Maintenance supervisor which resulted in lack of critical spare parts to service major equipment breakdown.
b) The batch size of white product was too small which contributed to speed loss and quality loss
c) The Planner’s order quantity of raw materials was too big and caused average inventory to increase and inventory overflow to outsource warehouse.
d) The double handling of raw materials by the warehouse staff which contributed to the wastage of overtime resources.
The study recommended the company:
a) Use a Kanban system to signal “pull” to the Planner to order spare parts for maintenance department.

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