MBA/MSC Operations Management Assignment Answers for SBS/ABS Students in Dubai

 

Words: 4000

 

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Part A

 

Answer the following questions: Word limit (Maximum 2000 words)

 

1. Just in time strategy is a strategy that aims to control Describe JIT strategy and discuss its benefits in operations management.
2. What is scientific management? Who are the pioneers of Taylorism? What are the concepts of Taylorism?

 

Part B

 

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.

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.

 

 

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 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.

 

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. 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.

 

• 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.

 

• 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.

 

• 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.

 

• 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.

 

• 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.

 

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-flavored rusks could not be dried at the same time as buttermilk rusks.

 

• 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.

 

• 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.

 

• Dispatch

 

Products were palletized and stored in an adjacent warehouse after which they were shipped to a Woolworths distribution center. 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.

 

6.  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 colour-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.”

 

• 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 aeroplanes 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.

 

• 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.”

 

• 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.

 

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 colour 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: Maximum (2000 words)

 

1. What are the challenges facing Nibbly Bits company?
2. What are the issues frequently faced during scaling and Batching?
3. What are the issues frequently faced during mixing stage?
4. What are the issues frequently faced during production?
5. What were the two critical things that determined the quality of rusks during baking?
6. What were the critical things that determined the quality of rusks during Breaking and Drying?
7. 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?
8. How lean helped the workers to organize their work with the aid of the pull system that Stephan had invented?
9. How lean assisted in improving meetings efficiency?
10. What were the benefits of implementing quality parameters and why they were color coded?

 

 

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