Business model

EXECTIVE SUMMARY:

London furniture's Ltd is an establish company which deliver quality tables for United Kingdom market. Now company is looking to open a new production plant for manufacturing mahogany dining tables to expand its operations in the new fast growing market. Company will be focusing on becoming the leading provider of mahogany dining tables in Europe in ten years time, at a profit.

Introduction:

This business model covers the operations management process regarding a new factory being setup in Malaysia to manufacture mahogany dining tables for sale in European market.

This model explains briefly about the production process, and furthermore looks into a number of issues including Location, Supply chain, Customer relation, Human Resources, Quality control and Environment and so on Performance matters and Competitive matters arising from the process.

This model explains areas listed above by keeping the company's objective under consideration.

COMPANY`S OBJECTIVE:

Become a leading provider for mahogany dining tables in Europe, at a profit.

Increase the company's share holder's wealth.

Make cost-effective and sustainable quality furniture that meets the customer's needs.

Achieve the competitive edge in furniture market in Europe.

Focus on social and environmental responsibility.

Provide excellent customer service.

VISION:

Our business will produce the high quality mahogany tables, according to customers need at the lowest price possible. Ethics and environment will be our priority.

PRODUCTION PROCESS:

The production process is concerned with converting a series of inputs (raw materials, facility, equipment, labour and land) with the support (finance, human resources and technology) into those outputs (quality finished mahogany dining tables) that are required by the customer.

We can add more value to our finished product by good advertising campaign and promotions. That will make our dining tables more desirable.

We can produce or tables by conveyor belt production process. In this process we can have a layout for our production floor by making two lines, first line will be responsible for the tops of the table and second line will be responsible for the legs of the table, according to costumers specified size of tables as they complete the table tops and legs, it can pass on to the next stage where they will be responsible for the making holes for the screws, finishing and polishing of the items and then both items can be transferred to the assembly process. The main advantage of this process is we can use the same machines for different specifications of tables supplied by customers by changing the programming of the machines according to customer needs. With the help of this process we can complete production of the tables quickly and effectively. At every stage of the process we can put quality controls by that if the last stage had made some mistake they can send back the unfinished product back to that stage of production, it will save us time and there will be less chances of returned goods from the end customer.

SUPPLY CHAIN

In the production of mahogany dining tables we need have a close supervision of the supply chain process both upstream and downstream. By keeping a balance between supply of raw materials from our suppliers and supply of finished tables to our customers, including inventories, goods returned and production flexibility.

It will be hard for us to get a huge amount of mahogany wood in Malaysia, so we can easily import mahogany wood for our needs from India. Because India have a lot of mahogany suppliers and India is easily accessible by its sea ports.

We cannot rely on only one supplier so we have to make contact with other suppliers so we can take advantages of competitive prices, quality and services, and if one supplier lets us down we can always have back up for our supply of wood.

We could easily get other items like bolts which will be used in production of the dining tables from hardware companies in Malaysia.

We have to concentrate on few process and their issues in a supply chain process.

Supplier relationship process: with the help of this process our admin staff can make a close relation with our suppliers by that we can negotiate for better price, good quality wood and on time delivery of the wood from our suppliers in India and hardware suppliers in Malaysia.

New service/product development process: in this process we can look into new ideas related to the design of our product brought in by customers or by the market.

Order fulfilment process: we will be easily accomplishing our orders with the help of facilities provided to our factory.

Customer relationship process: in this process our employees will build relationship with our external customers and help our customers to place orders.( SOURCE: OPERATIONS MANAGEMENT PROCESS AND SUPPLY CHAIN (NINTH EDITION p. 28)

To make supply chain more efficient we can do small lot sizes which will reduce the average level of inventories by doing that we can reduce the holding cost, insurance cost, storage and handling cost and taxes, and it can pass through the system quickly, by using uniform workload on each point in the factory. We can use the pull method by that we can start the process as soon as the customer places their order. We can also use the idea of quality at the source with that each person working in our company can be his own critic, this means stop the process and fix the problem at the spot. We can train our staff for different roles in case of covering other member of staff is on vacation or out sick, with that our supply chain will run smooth. We will be doing routine maintenance checks on the machines which will reduce the frequency and duration of machine downtime. And then we need to focus on good working condition of our staff because that can affect our supply chain as well.

Delivery to end customers:

In Europe we can make our warehouse to collect our tables coming from Malaysia in Dublin Ireland, because Ireland is one of the biggest hubs for international trade and by Dublin port easily accessible we can easily deliver to our customers in European Union. In European Union we can hire other furniture outlets to sell our dining tables with their expertise and local knowledge. Then they can deliver to the end customers. Reason not making our own outlet is that the running cost of those outlets is going to be higher than income on our product.

FACILITY / LOCATION:

Bayan lepas is a town in Penang which is a hub to one of the biggest industries in the world and being free industrial zone many of the multinational companies have opened their factories there. Population in bayan lepas is about 141,000, so it will be easy to get labour and staff. Bayan lepas is a diverse town over there we can have people from different backgrounds highest population is Muslims they can easily access to their mosque and other religions have their own praying places easily accessible. And by having Penang port accessible which is linking Penang to around 200 ports including Europe, America and Africa. This is the best location for our factory. Because we can easily access India where our mahogany wood is coming from and Europe where we are going to send our finished tables. For facility/factory we can easily rent a plant about size of 15000sq/ft which will meet demands for our plant from receiving of raw materials, storing the inventories, cutting of wood to polishing of finished tops and legs and assembly in the factory.

Other factors which we also have to keep in mind are

Bayan lepas has a favourable labour climate, because the working condition, wage rates, training for our staff will be easy and with that we can focus on union strengthening.

It also has good quality of life like Penang has good quality of schools, low crime rate and an attractive life style for people from different backgrounds according to their cultures.

Other factors in this location are in our favour as well like maintenance is easily available, insurance cost are also low due to nature of the place, and also we will save the cost on transportation from the port to the factory because factory being relatively close to the port.

EQUIPMENT

Machine is a major factor in production of dining tables. We could import our machines from China. Laser equipped machines to cut table tops precisely because mahogany is quite expensive wood and by using these machines we will reduce wastage which will give us low cost on the tables. And by having advanced technology we could programme our machines to cut the wood at different length and sizes according to customer needs. Automatic wood drilling machines to make holes for screws, with the help of these machines we can programme these machines to make holes for screws according to length and size provided in the design precisely again less wastage with the kelp of equipment.

HUMAN RESOURCES

HR is going to be responsible for number of areas including hiring new staff, hiring administration staff, hiring of skilled labour and support staff and any issues arising in these arears.

ADMINISTRATION

Admin is an important support process for the production process. For the start we could send in our own experts from existing company in United Kingdom, because they already know about sensitivity of the job according to company`s objective. Our admin staff will be responsible for number of jobs they will have close relation with our suppliers and customers, recording information for supply of wood, inventories, delivery of finished goods. They will be responsible for training and certification of labour and support staff. They will be in charge of payroll and other decisions connected to the pay grades of our staff.

Admin staff has to hire some local admin staff because they will be helpful in communication with our local suppliers and our staff and with that we need diverse environment in our factory for our staff.

HIRING OF SKILLED LABOUR AND SUPPORT STAFF

Bayan lepas has a population of around 141,000 so it will be easy to get skilled labour and support staff in that town. Mahogany being an expensive wood to reduce the wastage of the wood it is very important that we hire qualified and skilled staff Our HR department will be responsible for hiring support staff and skilled labour through a proper and controlled process. They can give a contract to a local firm for hiring this staff by that we can use their expertise to get the right staff for the job.

COUSTMER ISSUES:

Customer issues are main priority for our business. In our business customers evaluate the quality of the product as they received. Conformance to specification is the process in that customers judge our product against the way we advertised and also our competitor's product. We will focus on areas like consistent quality, on-time delivery or delivery speed.

Then we can also focus on is that our tables are fit to use, we will have to focus on durability, style, craftsmanship and appearance.

Value of our tables will also help in customer's satisfaction; here we will focus on top quality for low cost.

We can evaluate any of these issues by our psychological impression on our customer with provision of good customer service, due to the nature of our product we have to be easily accessible to our customers.

QUALITY ISSUES:

To maintain the quality of the dining tables we need to focus on areas related to quality issues listed below.

CUSTOMER SATISFACTION

We need to focus on satisfied customer, by addressing our tables quality issues by looking in to areas like is our product is according to the specification provided. We give value to our customers by having close contact with our customers and responding to their queries on time. our product should fit to use according to the quality standards of our customers.

STAFF INVOLVEMENT

In order to maintain our quality we will have to focus on our staff by training them for their designated jobs. As you can see we are using a high quality and expensive wood we have to trained them for less wastage and with that we also use very advance machines for our production process, so if our staff have lack of knowledge about machines that will also affect the quality of our end product which is dining tables. We have to focus on the issue that our employee teams are doing their job according to company`s and customer standards. As we need skilled labour for our business due to the nature of our production process so for that our staff we hire should meet the minimum certification limits.

CONTINUOUS IMPROVEMENT

We have to look for new ways and new technology for the improvement of our process. It will increase the efficiency of the work, reduce wastage, and also by providing new qualifications to our staff. Then we can use the process, plan team will select the process that needs improvement like equipment staff training, do then the team will monitor the process they are doing, study team will study the progress of the do process if there is any problems they will stop the process, act and if the results from the study process are successful that process will be implemented.

(SOURCE: OPERATIONS MANAGEMENT, PROCESS AND SUPPLY CHAIN (NINTH EDITION) P: 201)

COMPETITIVE ADVANTAGES:

To achieve a good reputation in the European market by looking in to our objective, we have to focus on our competitive advantages over our competitors for the customers.

COST LEADERSHIP

As we looked before because we are using high quality wood and as our suppliers are in India we are getting cheapest price possible from our suppliers. And then we are also focusing on our staff training and certifications which will reduce wastage on our production. And as we are using advance equipment which will also help reduce the wastage and it will increase the efficiency of our labour hours. These all measures will count towards the low cost for our end customers.

QUALITY

We will be focusing on top quality dining table, their design, superior product features and greater durability in our production process.

As we are focusing on high quality mahogany wood and advance equipment in the production process and our staff as well is well trained and certified, so our staff will focus on design and quality of the product.

TIME

We will also be focusing on delivery speed to our customers, by using as little time as possible on production process by using technology we are using in the process, but also focus on quality demand. Because our customers will be delivering to their customers, and if we don't we may have high chance of losing those customers.

FLEXIBILITY

We will be flexible by customizing each product according to customers demand, in that process we will have close customer contact, and an ability to reconfigure our processes to meet diverse customer needs.

ETHICS AND ENVIRONMENT

Ethics will be our priority by focusing on some of its issues including child labour, discrimination against minorities and women, minimum wage level and unsafe work place. Now a days the biggest issue in the manufacturing companies is child labour we will have a strict policy on child labour, there will be no discrimination against minorities and women in our company we can eliminate that issue by producing minimum level of jobs for minorities and women. We also have to obey laws for minimum wage; it will also make our factory look attractive for highly skilled staff. We also have to make our factory safe place to work. These all issues can be eliminated by hiring an outside independent audit company which will compare our factory to the standards given by international laws for manufacturing companies.

We also have to look into environmental issues arising from our production process. In our production process the main issue will be cutting of wood, that's why we are choosing our suppliers who are registered with ISO standards. Because we are seriously concerned about climate change, toxic wastes like our packing is recyclable. We will also use less transportation because transportation is one of the biggest producers of toxic fumes and we can also use high quality fuel for our vehicle, and our vehicles will meet the minimum standards for Co2 emissions supplied by the Malaysian government.

We will also consider integrity, respect for individual and customer satisfaction.

CONCLUSION

This report conclude that the operation of making mahogany hardwood table we are looking to start in Malaysia, if we consider the issues and operations explained above under the current economic condition, and our financial position, the objective of the company is achievable.

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