DMG 2063 Operation Management [Assignment-Gardenia Report]

1.0 INTRODUCTION 1.1 Company Background Background History In 1969, an American named Horatio Sye Slocumm was sent by International Executive Service Corporation (IESC) to East Malaysia to start a bakery. Mr. Slocumm brought with him 35 years of baking experience with one of America’s leading chain of bakeries. Gardenia was born. Gardenia Bakeries (KL) Sdn Bhd rolled the first loaf of bread off its line in 1986. Within four short years, it became the bread market leader with an astounding 99 percent brand recall rate and 80 percent top-of-mind top-of-mind recall. Gardenia’s Gardenia’s range of products grew and evolved through the years, becoming better and better better with each step. Leverag Leveraging ing on its brand brand strengt strength, h, Garden Gardenia ia now produces produces a variety of baked products to safety consumers’ demands. Gardenia Food Indus Industries tries is a group of franchise related companies incorporated in East Malay Malaysia sia (Sab (Sabah ah & Saraw Sarawak ak), ), Brune Brunei-D i-Daru arussa ssalam lam and and the the Republ Republic ic of Indon Indonesi esia a established for the manufacturing, packaging, and trade-distribution of Gardenia Brand bakery ices and creamery products. “S. E. Asia’s Gardenia Breads and Creameries” In 1969, Gardenia Food Industries production of Gardenia bakery ices and creameries foods foods was first first establis established hed in Kota-Ki Kota-Kinab nabalu alu Sabah Sabah Malaysia Malaysia by its founder founder (Datuk) (Datuk) Wong Tze Fatt, with North American bakery technical knowhow provided by Mr Scy Slocum of Atlanta USA and creamery technical knowhow knowhow provided by Mr Jim Humphries of California USA. Gardenia International Pty Ltd (Singapore) was subsequently set up in the Republic of Singapore as (Datuk) Wong Tze Fatt’s franchise development arm to promote his Gardenia Brand throughout the Far East and South East Asia. Since its early beginnings beginnings the Gardenia Food Industries (GFI) group of franchise related compani companies es incorpo incorporate rated d in East East Malays Malaysia, ia, Brunei Brunei Darussa Darussalam lam and Indones Indonesia ia were acquired in 2004 by JWPK Holdings and managed as subsidiaries. GFI remains a group of franchise franchise related compani companies es committe committed d to its founding founding principles, principles, with a singular  singular  1

customer driven purpose in responding to popular demands to produce quality fresh foods foods locall locally, y, which which meets meets with with inter interna natio tiona nall food food proces processin sing g and and hand handlin ling g safet safety y standards and respective country requirements for both “green” and halal certified food handling processes.

1.2 Product Produced 2

GARDENIA PRODUCTS

Gardenia Delicia Waffle

Gardenia Delicia Bun

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Gardenia Delicia Soft Roll

Gardenia Twiggies-Chocolate

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Gardenia Twiggies-Cream Dream

Gardenia Toast’em

Gardenia Quick Bites

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Gardenia Fluffy Buns

Gardenia Squiggles

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Gardenia Breakthru

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2.0 MANUFACTURING/SERVICE PROCESS 2.1 How many products should factory be able to produce in and 8 hour shift? Gardenia has total of 5 factories in west Malaysia which work 3 shifts per day, each shift 8 hours. In each shift, each factory will produce one type of bread. So, total up 5 different bread from 5 different factories in the same time. 2.2 How many customers per day should a company be able to service? Currently Gardenia has 52 outlets around west Malaysia to service. The factory producing more than 550,000 leavened bread per day, more than 7.7millions slices or 2 slices per person.

2.3 How to determine facility size to achieve high levels of utilization Staff in charged could not provide the exact answer because she is not from production department but marketing department. However, she explained that each of Gardenia products had different type of processing and all the machines will not be the same. The first two steps will always be the same and the next step after that will be different. Those steps are mixing the flour with yeast and rest it inside the mixer for 4 hours then add in other ingredients such as honey, water, and low fat milk.

2.4 Do your company plan capacity over a time horizon (long range planning, intermediate range planning, short range planning) Production team of Gardenia will plan to produce one new product twice a year  (intermediate range planning). Different factory will come out with different product. After  that new product achieves the entire standard requested, the company will take at least one year before launching it. This is because all the machines that use in production are from German. From the setup of all the machines, maintenance of machines, training and handling of machines until the last part start producing the breads, it take time up to one year.

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2.5 How to measured capacity efficiency/effectiveness (any formula used) Gardenia has produced 31 products in Malaysia. Last week they produce 440,000 breads. The effective capacity is 550,000 breads. The production line operates 7 days per week with three 8-hours shifts per day. The line was process at the rate of 7639 per  hour. Solution: Design Capacity = (7 days x 3 shifts x 8 hours) x (7639 breads per hour) = 1,283,352 breads

Utilization

= Actual Output / Design Capacity = 440,000 / 1,283,352 = 34.3% = Utilization is not really 100%

Efficiency

= Actual Output / Effective Capacity = 440,000 / 550,000 = 80%

= Product is efficient.

Gardenia will increase or produce more production when the school holidays are ended and start the new season and they will decrease the product when festival in Malaysia was coming, this is a part of their strategic in operation.

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2.6 How to forecast future capacity requirement? Any relation with future demand? Gardenia has future capacity to maintain their product every year. For the last year  Gardenia has produce two new product which is “breakthru” and “waffle”. Gardenia has to achieve their target atleast one or two product every year; this is the strategic of  Gardenia to improve the quality in the market.

Every each new product Gardenia produce, they should have to prepare the new machine to process that product. The machine is different depends on the product. All the machine and training import from German and Gardenia will set up the machine every two month.

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Chart 1

The profit of Gardenia is higher. The variable cost and the fixed cost is balanced. Gardenia will determine the entire of product is consistent in the market and achieve profitability.

3.0 Product or service design 3.1 What types of product or services offered by company

There are various types of product that are twiggies, quick bites, toast’em, fluffy buns, squiggles, delicia, delicia soft roll, breakthru, and waffle. Now, there are about 31 product that produce by gardenia.

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3.2 Explain about new product / services development strategy 

The latest product from gardenia is waffle. Waffle was launch on September 2011. They come with various types of flavor that are banana, classic cinnamon, maple wholemeal, fresh egg vanilla, and blueberry.

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The targeting market for this product is especially for kids, officer, and student.

3.3 Any technique to generate new product ideas There are four technique or factor : I.

Import all raw materials from Canada and Europe. The raw material that gardenia import is wheat.

II.

Gardenia uses the technique of sponge and endough. The mixture of wheat, dispensed water, yeast, vitamin and mineral are put together in this technique.

III.

Gardenia uses high technological machine to make the product equally manufactured with the great quality.

IV.

Delivering. Gardenia will start delivering their fresh made product starting from 4.00 in the morning.

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3.4 Cost of new product design 

 A lot of cost needed to design a new product from gardenia. The latest product that gardenia design is waffle. All the cost of new product are needed from brain storming to develop new creative product , to buy new types of machine to develop the product and also paying the worker’s salary. Designing and printing new types of packages can also be a part of new product design. Gardenia has to design a very creative packaging design to attract customers to buy their product.

3.5 Explain about product development stages?

ProductDevelopment Stages 10 9 8 7 h t 6 n5 o M4 3 2 1 0

Product Development Stages

Stages

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Generating Idea  – The idea come from the CEO himself and he will share the idea with R&D department. From here, they will develop a new product according to CEO’s proposal. This process usually takes around one month to discuss and present the idea.

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Product Specification  – After the idea has been approved, R&D will start producing the product in small quantity for further development and research. Additionally, at this stage they will start creating the product packaging, marketing strategy and marketing research as well.

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Design review  – At this stage, the product will be presented to the CEO including the market research and strategy.

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Test Market  – The market test will be held within the organization. This is to be done in order to avoid company’s market competitor to replicate the company product.

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Introduction to the market  – A mass promotion is executed to promote the product. Types of promotion including media and printed advertisement.

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Evaluation  – Three (3) months time is given to evaluate the product success. The product will be retracted if it’s considered as failure.

3.6 Explain about department involve in product development •

Research and Development – Responsible to develop a product based on the framework given by the CEO. 15

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Marketing – Developing the product market research, strategies, and promotion

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Quality Assurance – Ensuring the product is up to the Gardenia standard

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3.7 Explain about certain techniques involved to design product

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 A F E

C D H

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J

L

I K

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M N

M N

M N

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O Chart 3 – Layout in Gardenia Factory

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The Process  A = Mixer(4hours) B = Mixer 2(include honey,water,milk) C = Divider(dolls into smaller bread) D= Rounder  E= Check weight (over lender) F= Intermediate proffer(small room, rest for 10 minutes) G= Mowler(shaping rolls) H= Final proofer  I = Auto lidder  J= Oven K = Dependent L= Bread coller(two towwel) M= Slicer  N= Bagger(packaging) O= Metal detector(associated with logistic department)

Chart 4

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3.8 Company make or buy components of product  As you know, the Gardenia Company does not make any of the components because of  insufficient space in Malaysia. There are even some materials that are imported from Canada and some parts of Europe. The materials that are brought in is wheat. Wheat is the main material for Gardenia to produce breads. The other materials like flour, sugar, honey and so on are all from suppliers which supply their product to Gardenia. Gardenia buys flour from their main supplier that is Prestasi Flour Mills Sdn Bhd. There are some other suppliers which supply to Gardenia that is Federal Flour Mills Bhd (FFM) that is controlled by Tan Sri Robert Kuok. Gardenia also buys flour from Malayan Flour Mills purely due to commercial reason. All the raw material purchased by Gardenia is in large quantity. From this, we can conclude that there is no any material made to produce the products by Gardenia. All the materials are purchased directly from internal and external suppliers.

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4.0 Scheduling 4.1 How company schedules machines, tools and people to make product or give services to satisfied customer  These schedules handle by engineering department. They do maintenance every Wednesday to clean up the machine. By the way, everyday they do the cleanliness between the produce products to maintain the hygiene of the bread.

4.2 What basis the company doing scheduling (weekly, daily ,hourly basis ) This company usually use ‘hourly basis’ because they were work every day for 24 hours per day.

4.3 How company control input and output to reduce overloading in the facility ( overloadingcrowding in factory ) ( under loading-idle capacity in facility ) This companies under control their product. Every day, every month and every year. The product per day will be produce 550k breads.

4.4 Do these companies applied Gantt Charts? Explain ( planning charts used to schedule resources and allocate time ) 20

They applied Gantt Charts in marketing. Details are not mentioned since it is their  company’s strategy.

4.5 How companies determine the order in which jobs should be done/customer should be served. Their products mainly distributed in Klang Valley. Some to the North and South regions of Penisular Malaysia such as Perlis, Kedah and Johor. For their factory in section 23, other products would be produced along the production week except for the ‘butter scotch’ bread which only being produced 3 days per week. They normal daily production would be about 550,000 in total for the whole factories. They will reduce their production on public holidays since at that time the demand will be decreased temporarily and they can start the production at the normal rate after that especially when the demand raises again during school time started.

4.6 First come, first serve (FIFO) The Gardenia company applying the First In First Out (FIFO) method to control the flow of their production materials and finished products. The first in first out (FIFO) method is used to introduce the subject of materials costing. The FIFO method of costing issued materials follows the principle that materials used should carry the actual experienced cost of the specific units used. The methods assume that materials are issued from the oldest supply in stock and that the cost of those units when placed in stock is the cost of  those same units when issued. However, FIFO costing may be used even though physical withdrawal is in a different order. 21

The reason why Gardenia Company used the First in First out (FIFO) method. 1. Materials used are drawn from the cost record in a logical and systematic manner. 2. Movement of materials in a continuous, orderly, single file manner represents a condition necessary to and consistent with efficient materials control, particularly for  materials subject to deterioration, decay and quality are style changes. First in First out (FIFO) method is recommended whenever: 1. The size and cost of units are large. 2. Materials are easily identified as belonging to a particular purchased lot. 3. Not more than two or three different receipts of the materials are on a materials card at one time.

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5.0 Appendix

GARDENIA BAKERIES SDN BHD

INDUSTRIAL VISIT OPERATION MANAGEMENT SUBJECT

OPERATION MANAGEMENT STUDENTS AT GARDENIA

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SPECIAL WELCOME NOTE CREATED BY GARDENIA FOR MSU STUDENTS

GARDENIA’S BREAD OVEN

GARDENIA’S DIVIDER DOH AND SPONGE MACHINE ACCORDING TO SIZES 24

MOWLER MACHINE (Shaping the bread)

SLICER (Cutting the bread into 7.7 slices each)

COLER MACHINE (The bread were cool down after the heating process)

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ORIGINAL WHEAT RECIPE FOR GARDENIA 26

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