Section 1
Management concerns
Manufacturing director
The concern of the manufacturing director when choosing between the "conventional" conch and the new technology process is that in his opinion they will not be able to meet the forecast growth in demand for the forthcoming period if they delay in the purchase of another "conventional" conch machine. Therefore the company will be forced to cut back on all of their expansion plans. He is concerned that the new technology conch could take 12-15 months to make and install compared to the "conventional" conch, which could be installed, and working in under six months and therefore have considerable flexibility because they have four identical existing machines. Furthermore he looks at the "conventional" conch as a solution to the current capacity problems. Also he is concerned that the new technology conch would require different skills, and would be too disruptive at a time when they need to focus on output and new product development.
Marketing director
The concern of the marketing director when choosing between the two machines is that the new technology conch would not be into production until at least six months later compared to the "conventional" conch. He is also concerned that there is no guarantee that a full scale new technology conch would produce the same results as the small trial machine even though the tasting panel cannot distinguish from the standard product. He feels it is a far greater risk to the unique 'Cadbury Dairy Milk' (CDM) flavour and texture.
Engineering development director
The concern of the engineering director when choosing between the two machines is that he feels the new technology conch offers too many advantages over the "conventional" conch. This is mainly expressed in financial terms, as the new technology conch would make considerable savings to annual cost. He is also concerned that competitors such as Mars, Rowntree-Nestle are investing heavily in new technologies in their factories and Cadbury could be left behind, which could leave them less competitive.
Chairman
The concern of the chairman when choosing between the two machines is that will the new technology conch help them be more competitive.
Section 2
Market environment
The UK chocolate confectionery market is lead by three companies, Cadbury, the market leader, closely followed by Rowntree-Nestle and Mars. Cadbury has competed for sales for its various chocolate products by relying on its unique "Cadbury Dairy Milk" flavour and texture. Also they have competed by exporting and selling brands in volume such as CDM and Roses.
The way Cadbury has competed for sales is expected to change in the 1990's as consumers are demanding more varieties and experimenting with new tastes. There is also the threat from European manufacturers making attack on the domestic market. Cadbury's will have to defend existing volume brands while at the same time launch new high quality products to satisfy the niche opportunities provided by changing consumer and retailer demand.
Section 3
Flexibility
Flexibility is the ability to change between products or customers with minimal costs and delays. Flexible operations enable organisations to quickly and ...
This is a preview of the whole essay
The way Cadbury has competed for sales is expected to change in the 1990's as consumers are demanding more varieties and experimenting with new tastes. There is also the threat from European manufacturers making attack on the domestic market. Cadbury's will have to defend existing volume brands while at the same time launch new high quality products to satisfy the niche opportunities provided by changing consumer and retailer demand.
Section 3
Flexibility
Flexibility is the ability to change between products or customers with minimal costs and delays. Flexible operations enable organisations to quickly and inexpensively change from one product to another in response to customer requests.1
Over the years, flexibility has been defined in various ways. An early definition by
Mandelbaum (1978) defines it as "the ability to respond effectively to changing circumstance", and characterised flexibility into two different forms: action flexibility and state flexibility. Action flexibility is defined as "the capacity for taking new action to meet new circumstances", whereas state flexibility is defined as the "capacity to continue functioning effectively despite changes in the environment".
Buzacott (1982) defines flexibility as the ability of the system to process a wide variety of parts or assemblies, without intervention from the outside to change the system. This is similar to the concept of state flexibility originally proposed by Mandelbaum. Buzacott further classified flexibility into two classes - job flexibility and machine flexibility. Job flexibility is the ability of the system to cope with changes in the jobs to be processed by the system, whereas machine flexibility is the ability of the system to cope with changes and disturbances at the machine and workstations.
A different taxonomy by Zelenovic (1982), however, proposes that flexibility of a production system is a measure of its capacity to adopt to changing environmental conditions and process requirements. Zelenovic identifies two components of flexibility - design adequacy and adaptation flexibility. Design adequacy is related to Buzacott's concept of job flexibility, whereas adaptation flexibility relates to the time required to change job types.2
Flexibility can be classified into four types of requirements.
Product/Service Flexibility
Product/ Service flexibility is the operation's ability to introduce new products and services. In a chocolate confectionery factory it means the ability to adapt its manufacturing resources so that it can launch new products.
Mix Flexibility
Mix flexibility means being able to provide a wide range of resources and services. Most operations produce more than one product or service. In addition most operations do not make their products or services in high enough volumes to dedicate all parts of their activities exclusively to a single product or service. This means that most parts of any operation will have to process more than one type of product or service and so will at times need to change from doming one activity to doing another.
Volume Flexibility
Volume flexibility is the ability of the operation to change its level of output or activity. All operations will need to change their level of activity because all operations to some extent have to cope with fluctuating demand for their products and services. The demand for chocolate confectionery will vary through the year and the factory will need to adjust its output accordingly.
Delivery Flexibility
Delivery flexibility is the ability to change the timing of the delivery of the service. Usually this means the operation providing goods or services earlier than anticipated although it may mean delaying delivery. Usually the latter is the easier task. 3
These various areas of flexibility are required in order for an organisation to deal adequately with changes that occur as a result of such factors as machine breakdowns, alterations to customers orders, redesign of existing products and the introduction of new products. In addition flexibility enables organisations to cope with the uncertainty that often surrounds the actions of competitors and the market.4
Flexibility differences
The "conventional" conch machine would have more flexibility in terms of standardisation as it would be identical to the existing four machines, thus reducing the cost of holding spares for capital equipment. The "conventional" conch could be installed and working in less than six months compared to 12-15 months for the new technology conch, which would temporarily slow the company down in any potential developments. Also operators will be familiar with the "conventional" conch and therefore eliminating any extra staff training. On the other hand, the new technology would require some type of training for operators and maintenance maybe carried out by the vendor.
The new technology conch would have more machine flexibility, as the changeover time would be dramatically reduced compared to the "conventional" conch. This could lead to longer production runs. Furthermore the new technology will allow a much wider range of chocolates to be produced and therefore capable to adapt to a changing market environment, which they are, expected to face. The new technology conch would have more flexibility in operations compared to the conventional conch as it would eliminate the process of 'in -line viscositing', which would lead to savings in cost and time. The new technology conch will have more flexibility in terms of volume compared to the "conventional" conch because it will work at any size from one tenth to double the size of conventional conches.
Section 4
Manufacturing strategy
The implications of purchasing another "conventional" conch machine would be that it would only be a short-term solution to current capacity problems. The company may need to look more long-term planning by acquiring the new technology conch. The "conventional" conch would solve the capacity dilemmas they are experiencing and new product development could get into action faster. However the new technology conch when fully installed will allow a much wider range of chocolates to be produced and with a larger capacity. With the ability to produce a wider range of chocolates compared to the "conventional" conch, the new technology conch will be able to fulfil the company's objective of exploring niche markets.
By steadily introducing the new technology, Cadbury's can ease their way into the new system and reduce the possible impact that change can bring to a company. Therefore when eventually the "conventional" conch comes to be replaced, Cadbury's will have experience of the new technology. Furthermore Cadbury's should be investing in new technology to remain competitive as Mars and Rowntree-Nestle are investing heavily in their factories. Also as the market leader they should be seen as innovators in new technology operations and create barriers to entry from competitors.
Cost benefits
The "conventional" conch machine would save cost in the short-term as the new technology is more expensive to purchase. However the new technology will accrue savings over time. For example substantial material savings would be made and less defects, which would save time.
The new technology conch would occupy less space compared to the "conventional" conch therefore it would lead to spaced savings. The saved space would provide opportunity costs for further expansion. Furthermore Cadbury's would not need to expand their factory or require planning permission. By saving costs in the production process, Cadbury's will increase profitability and remain competitive. This will enable Cadbury's maintain price competitiveness and quality.
Opportunities for Cellular Manufacturing
Cellular manufacturing is the physical layout of the factory into product oriented work centres. Each center or cell includes the machines and tools necessary to efficiently produce a family of parts. The objectives of cellular manufacturing are to reduce material handling, simplify tool control, reduce expediting and in-process inventory and improve operator expertise.
The type of cellular manufacturing that could be introduced at Cadbury's is group technology (GT),. In group technology families of parts that require similar machining operations are identified. Production managers have long realised the scheduling advantages of grouping parts into families with similar set up and machining requirements.
With GT, parts can be grouped into families for design as well as manufacturing. These groupings are based on similarity in size, shape, use, and/or method of manufacturing. Once these families of parts are established, duplicate parts can be eliminated. Parts can also be redesigned and substituted for similar parts. Group technology thus has several advantages.
. Design can be organised into families so they can be easily be retrieved.
2. Some parts that were thought to be different can be eliminated.
3. One manufacturing system or cell can be designed to make entire family of parts.
4. Robots can be programmed and reprogrammed to adapt to differences within a family.
5. A larger volume of parts can pass through a set of machines, thus reducing unit production costs.
6. The batch scheduling of parts within a family reduces setup time, and people gain expertise in their area because the parts they handle are similar.5
References
. P 40, Vonderembse, M.A., White., (1991), Operations Management: Concepts, Methods and Strategies, Second Edition, West Publishing Co.
2. Narain, R., Yadav, R.C., Sarkis, J., Cordeiro, J. J., "The strategic implications of flexibility in manufacturing systems", International Journal of Agile Management Systems, Volume 2 Number 3 2000
3. P 65-67, Slack, N., Chambers, S., Harland, C., Harrison, A., Johnston, R. (1995), Operations
Management, Pitman.
4. Stockton, D., Bateman, N., "Measuring the production range flexibility of a FMS",
Integrated Manufacturing Systems, Volume 6 Number 2 1995
5. P 62-63, Vonderembse, M.A., White., (1991), Operations Management: Concepts, Methods
and Strategies, Second Edition, West Publishing Co.
Operations Management