Professional Documents
Culture Documents
2018-20 Batch
Food Plant Operations Management
Submitted to
Dr. Narendran
Submitted by
Group - 5
The following are the issues identified from the case study:
Competitive pressures:
1) Commoditization of oleoresin- only ways to survive and grow are to reduce cost and
move up the value chain
Reduced costs: - via a smart global sourcing strategy (e.g. off-
grade berries from countries with different
harvesting periods)
- by maximizing plant utilization (producing a
diversified line of spices)
Moved up value chain: - entered high value flavorings market
via a joint venture in Austria
Recommendations
1. Switching from an FG approach to an SFG approach.
2. Implementing a VMI and CPFR to improve forecasting.
3. Reducing raw material inventory and JITD approach.
4. Switching to a lean layout.
5. Reducing manual activities and implementing automation methods in product flow
from extraction to homogenization and from SFG charging kettle to blending.
6. Implementing blend to order approach and variants separation.
Is Synthite operations efficient?
From the analysis, we can conclude that Synthite operation was inefficient. It caused a
lot of wastes and unnecessary activities since it matched all of the seven wastes.
Reduction of Raw inventory is required to reduce waste and allocate space for the new
storage tanks with a lean layout in mind.
Vendor Managed Inventory and Colluding Pratices For Food Retailers implementation
through Supplier Relationship Management and shared trust to become more equipped
for Blend to Order strategy resulting in higher agility and responsiveness to customer
orders.
Reduction of manual labor and automation introduction would also increase the
efficiency of the overall operations.
Overproducing: Synthite operated 24/7 but could not meet customers’ requirements and
orders
Waiting: The long changeover times created bottleneck and excess idle machines
Transportation & Excess Movement: Frequent manual material transfer
Operations at Synthite
Operational challenges
Difficulty of fulfilling customers’ orders on time despite of high levels of inventory
Synthite might lose customers because of long lean-time (1 week v.s. 2-4 weeks)
Rarely had the right product in stock at the right time or product need re-packing and re-
blend
- Difficulty fulfilling customer orders on time, despite having high levels of inventory.
- Difficulty caused mainly because of the high variety of products they had and the
unpredictable demand of their customers.
- Almost daily, they had to pull out packaged, finished product from their stock, and re-
blend it to the specifications of incoming customer orders.
This caused much frustration among the workers, as they saw it as a waste of time.
3) Inventory: reduce FG stock, increase SGF stock, better utilize raw material stock
Implementation of these priorities will help alleviate the listed competitive pressures
Over-Processing: Many finished goods (FG) that needed to be recycled and re-blended
Excess Inventory: 3-months raw material inventory
Scrap & Rework: Expensive FG level cleaning cost
Labor: 3 man hours per cleaning = INR 225
INR 225 x 44 cleanings = INR 9,900
Oil: 1/2 kilo oil per cleaning = INR 5,000 x 44 cleaning = INR 220,000
Operations at Synthite
3-months of raw material inventory evaporated during storage, causing a loss of INR 19
MM every quarter.
Manual material loading resulted in loss of material and capacity and extra costs of re-
processing
Long changeover time and cleaning time incurred extra costs and prolonged lead-time
Extended tests took 1-7 days and caused longer lead-time
Operational challenges
Synthite currently has an average monthly demand off 33MT and a peak of 52MT
(Exhibit 1).
No additional Equipment required for SFG production based on cycle time and volume
analysis (Exhibit 5).
Additional investment required for the storage of the SFG, suggested five 10MT vessel
to account for 1 month safety stock (Exhibit 14).
Additional Considerations
Given that 90% of Synthite sales are comprised of black pepper oleoresin and that all
the other variants represent 10% or less, it would be interesting to conduct a profitability
analysis to assess whether or not the ROI from producing these complex variants is
worth the added operational cost?